TotalEnergies Shares Slip as Iran War Splits Its Business in Two

TotalEnergies Shares Slip as Iran War Splits Its Business in Two Oil trading and refining are absorbing the war dividend, but the integrated LNG business is underperforming and Jefferies expects downstream strength to cover the gap. TotalEnergies shares fell as much as 2.5% on Thursday (2026-07-16), underperforming European rivals BP and Shell early in the session, after the French major flagged weakness in its integrated gas and LNG business even as oil trading delivered another strong quarter.⁷ The divergence cuts along a fault line the Iran war created. US-Israeli strikes beginning on 28 February (2026-02-28) destroyed roughly 20% of global LNG supply almost overnight, gutting the oversupply analysts had expected to dominate 2026, while simultaneously tightening crude markets and lifting refining margins. For TotalEnergies, one of the largest LNG portfolio holders among European majors, those two effects landed on opposite sides of the ledger.^5,1 Oil trading earnings are expected to remain at "the same strong level as in the prior quarter," the company said Thursday (2026-07-16). Cash flows from its integrated power business should "increase strongly," supported by the acquisition of a 50% stake in a large portfolio of gas-fired power plants in western Europe completed at the end of April.⁷ The gas business is a different picture. Extensive damage to Qatari export infrastructure removed the anticipated price ceiling from oversupply and replaced it with a volatile, supply-short market. Montel reported that analysts now expect LNG prices to remain prone to spikes in the near term, with the oversupply outlook for the full year effectively gone.¹ TotalEnergies' own LNG book has not straightforwardly benefited. In May (2026-05-21), chief executive Patrick Pouyanné said the "reliability" of LNG from an affordability standpoint is likely to be questioned as governments revise long-range energy planning toward electrification in response to the disruption.² Exploration and production results are expected to increase in the second quarter despite the conflict overhang. The company reported an Iran impact of around 210,000 barrels of oil equivalent a day, below the guidance it communicated at the end of the first quarter. But a portion of production that could not be lifted during the quarter will be recognised in E&P results at end-June crude prices, which were below $70 per barrel, compressing the revenue realisation on that volume.^7,6 ICE Brent crude front-month was trading at $85.45 a barrel on Thursday (2026-07-16), down 0.52% on the session and well above the level at which the deferred production will be booked. A Bloomberg Intelligence survey conducted in May (2026-05) found that a majority of market participants expect ICE Brent to average between $81 and $100 a barrel over the next twelve months, with global supply disruptions running at 3 million to 7 million barrels a day for much of that period.³ Jefferies analysts, according to Rigzone's reporting Thursday (2026-07-16), expect the weak integrated LNG result to be offset by strong performances in downstream and elsewhere in TotalEnergies' portfolio. That framing aligns with the company's guidance on refining margins and oil trading, where the conflict created sharp dislocations in crude and product markets.⁷ The European power acquisition is a related hedge. Gas-fired generation in western Europe is benefiting from the same tightness hammering the LNG book: ICE Endex TTF front-month was quoted at €54.37 per megawatt-hour on Thursday (2026-07-16), a level that supports spark spreads while signalling the supply stress Pouyanné flagged.⁷ Analysts at Met Group said in early May (2026-05-07) that oversupply could still materialise over the coming years even with near-term tightness, but the pace of Qatari infrastructure repair and the scale of electrification policy response will determine how long the current squeeze persists.⁴ How much of the E&P production impact carries into the third quarter, and whether deferred volumes recognised at below-$70 prices prove a timing quirk rather than a persistent drag, will set the tone for any rerating of the stock once full results land.^6,7