As we approach the middle of 2025, the ASX 200 has bounced back nicely from a rollercoaster start to the year.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) sits nearly 5% higher than the beginning of 2025. 

Yesterday the market closed at a record high. However there is one sector in particular that has seemingly missed out on the rebound. 

Running out of energy 

So far this year the S&P/ASX 200 Energy (ASX:XEJ) index is down more than 6.58%. 

This has been influenced by low crude oil prices which have dropped approximately 16% over the last year. 

According to analysis from Bell Potter in May, this has been influenced by two major factors. 

Escalating US trade tariffs are directly impacting global economic growth forecasts (IMF revised 2025 global growth down to 2.8%) and prompting significant cuts to oil demand projections by major agencies like the IEA and EIA.

Secondly, the OPEC+ alliance has pivoted from cautious supply management to an accelerated unwinding of voluntary production cuts, approving substantial output increases of around 411,000 bpd for May and June 2025.

Short term pain – long term upside?

A report from Bell Potter also predicts there is opportunity in the battered energy sector. 

According to the report, 

For long-term investors, the key is to look beyond near-term oil price swings, like those currently unfolding, and focus on the broader supply-demand dynamics that will shape the sector over the coming decade. Given the sell-off, we believe there are opportunities in the ASX energy sector. However, with short term downside risks elevated, being selective is key.

Let's look at some energy stocks that could be undervalued.

Santos Ltd (ASX: STO) 

The largest energy stock by market cap, Santos has seen its share price fall 1.62% in 2025. It has fallen more than 11% over the last 12 months. 

It has major projects like Barossa LNG and the Pikka oil development nearing completion. This should mean a reduction in capital expenditures post-2025. 

Brokers seem to agree, with Bell Potter placing a $7.35 price target on the energy stock. 

From its current price of $6.66, this would imply a 10.36% upside. 

Back in May, Macquarie placed an even more attractive target price of $8.50. 

Yancoal Australia Ltd (ASX: YAL)

This Australian coal mining company has endured a tough year so far, but appears to be bouncing back. 

Its share price has fallen 14.57% YTD, even despite a 3% rise on Tuesday. 

Bell Potter indicates it could be good value. The broker currently has a "buy" recommendation and price target of $6.60 on the coal miners shares. 

This would be a 19.78% rise. 

It was also recently upgraded to a "strong buy" recommendation last week by Commsec analysts. 

Foolish takeaway

In a year of ups, downs and then more ups, there appears to be opportunity in the energy sector. 

More importantly, these are established ASX 200 listed companies, not speculative penny stocks. 

This gives me confidence they can weather the short term storm, and come out the other side.