While the Middle East conflict is boosting oil and gas stocks, it is likely to accelerate Europe's shift away from fossil fuels in the medium term, echoing the jolt that followed Russia's invasion of Ukraine in 2022, according to Jefferies.
The investment bank argued that the energy shock is strengthening the long-term case for renewables investment, while oil and gas stocks are enjoying a short-term bounce and clean energy shares are lagging amid higher interest rates.
Europe's energy mix has shifted significantly since the last crisis, Jefferies noted, with renewables rising from around 30% of EU power generation in 2019 to nearly 50% in 2025, while dependence on Russian gas has fallen from 45% to 13%.
Europe's larger renewable base is already limiting the number of hours each day when gas-fired power plants are needed to meet electricity demand, Jefferies said, even as gas continues to set the marginal price in some markets like the UK.
Spain was cited as a "live example" of successful decoupling, with gas setting electricity prices in only around 15% of hours so far in 2026, compared with 89% in Italy.
Jefferies named wind turbine makers Nordex and Vestas, cable manufacturer NKT, solar inverter group SMA Solar, and utilities including FTSE 100-listed SSE PLC (LSE:SSE), Germany's RWE and France's Engie as well-placed to benefit from accelerating transition investment.
Solar installations across the EU have risen fourfold since 2019, reaching 65.6 gigawatts in 2025.