Barclays sees the best setup for energy services in 20 years, names best stocks

Investing.com -- Barclays has upgraded its energy services industry view to Positive, arguing that the Middle East supply shock will prove to be a market-defining event that drives structurally higher oil prices and a multiyear upstream spending cycle.

This will create what the bank believes will be "the best setup for Energy Services since the early 2000s."

Analyst J. David Anderson upgraded Halliburton, Patterson-UTI Energy, ProPetro, Transocean, Noble, and Seadrill to Overweight, while downgrading Baker Hughes to Equal Weight and NOV to Underweight.

Barclays drew a direct comparison to the Arab Embargo of 1973 and the Iranian Revolution of 1978-79, saying the current supply shock "can only be compared" to those market-defining episodes, both of which led to lasting structural shifts in energy investment and policy.

On upstream spending, Barclays now expects growth of 9%-10% in 2027 and at least double-digit growth in 2028, a sharp revision from its prior forecast of 3%-5% growth.

"With little spare capacity across equipment and services globally, pricing power leverage should then start to shift toward services," Anderson wrote.

Within its upgrades, Barclays flagged U.S. onshore-leveraged names, Halliburton, Patterson-UTI, and ProPetro, as offering the most earnings torque to higher oil prices, forecasting 600 active U.S. rigs by end-2027.

On the offshore side, Transocean, Noble, and Seadrill were highlighted as potential "biggest winners," with Barclays now forecasting 131 active deepwater rigs by end-2027, up from 122 currently.

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