The 'Boys in Green' have been drawn alongside Holland and Germany in Group C, with only two qualification spots up for grabs, after a complicated draw.
"To be drawn with Germany and Holland is extremely difficult. The nature of how we ended up in that group [not being a host nation for Euro 2020] is a hard one to take," said O'Neill.
"But the conditions of the draw were made before the draw. That is how UEFA have put it together.
"Being in a group of five will help us given our resources. We have to do as well as we can. There is no reason why we can't beat even the biggest teams in Europe in Belfast.
"We have got a relatively young team now and these are going to be great games for those players to be involved in."