Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
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Canadian energy stocks sold off sharply on Monday as Canadian Natural Resources dropped 3.6% and Suncor Energy fell 3.0% (data as of May 25, 2026). The catalyst: Iran agreed to reopen the Strait of Hormuz following a 60-day extension of a ceasefire originally reached in early April, sending oil prices lower and pressuring Canadian energy producers.
What Happened: Iran Ceasefire Extension
The United States and Iran extended their ceasefire agreement by 60 days on Monday, with Iran agreeing to reopen the Strait of Hormuz during a 30-day window. The strait is a critical global oil shipping route, and its reopening signals reduced geopolitical risk in the Middle East.
When geopolitical tensions ease, oil prices typically fall because supply concerns diminish. That is exactly what happened Monday — oil prices dropped as the Iran de-escalation reduced fears of supply disruptions.
Why Energy Stocks Fell
Canadian energy producers like CNQ and Suncor are directly tied to oil prices. When oil falls, their revenue outlook weakens, and investors sell the stocks.
Monday’s selloff was straightforward: lower oil prices equal lower expected profits for energy companies. While the TSX composite index climbed 1.04% to a record close of 34,830.89 points (data as of May 25, 2026), energy stocks moved in the opposite direction.
The broader market rallied because lower oil prices ease inflation concerns, which in turn causes bond yields to fall. That is positive for financials and most other sectors — but it is a direct headwind for energy producers.
What It Means for Beginner Investors
If you are new to investing, Monday’s divergence between the TSX and energy stocks is a useful teaching moment. Not all stocks move together, and single-sector risk is real.
Here is what beginners should understand:
Diversification Protects You
If your portfolio was concentrated in energy stocks, Monday hurt. But if you held a diversified portfolio — including financials, gold miners, and ETFs — you likely ended the day in positive territory.
Canadian bank stocks like Royal Bank of Canada, TD Bank, and Bank of Montreal all gained between 0.8% and 1.2% on Monday (data as of May 25, 2026). Gold mining stocks like Agnico Eagle, Barrick, and Wheaton Precious Metals surged 4.2% to 5.6%. A balanced portfolio would have absorbed the energy selloff without major damage.
Volatility Is Normal
Energy stocks are among the most volatile sectors on the TSX because they are tied to commodity prices, which swing based on geopolitics, supply dynamics, and global demand. A 3% single-day drop is not unusual for CNQ or Suncor — and it does not mean the companies are broken.
If you are investing for the long term, short-term sector moves like Monday’s should not change your strategy. Volatility is the price you pay for long-term returns.
ETFs Reduce Single-Stock Risk
One way to avoid getting burned by single-sector selloffs is to invest in broad-market Canadian ETFs. An all-in-one ETF like VEQT or XEQT holds hundreds of stocks across multiple sectors, so no single event — like an Iran ceasefire — can derail your portfolio.
If you are a beginner investor still learning how sectors move, starting with ETFs is a smart way to build exposure without taking concentrated risk. You can always add individual stocks later as you gain experience.
What Is Next for Energy Stocks
The energy sector’s performance from here depends on where oil prices go. If the Iran ceasefire holds and global supply remains stable, oil could stay under pressure — which would be a headwind for Canadian energy producers.
On the other hand, if demand picks up or supply disruptions emerge elsewhere, energy stocks could reverse Monday’s losses quickly. The sector is cyclical, and timing is difficult even for experienced investors.
For now, the key takeaway is this: if you own energy stocks, make sure they are part of a diversified portfolio. And if you are just getting started, focus on building a balanced foundation before taking concentrated sector bets.
Ready to start building a diversified Canadian portfolio? Open a Wealthsimple account — commission-free trading makes it easy to invest in ETFs and individual stocks without paying commissions. Wealthsimple offers a clean, beginner-friendly interface and is one of the easiest platforms for new Canadian investors to get started.
For more guidance on choosing the right investing platform, check out our full comparison of Canadian brokerages.
Data as of May 25, 2026.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
