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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WTI crude fell below US$70 in late June 2026 for the first time since March 2, completing a full round-trip from the war-driven spike that dominated headlines earlier this year. The August WTI contract settled around $69.23, down approximately 3.74%, while Brent crude fell to roughly $71.99, down about 4.34%, with intraday lows touching $72 — the lowest Brent level since February 27, data as of June 27, 2026.
The catalyst behind the decline is straightforward: the Strait of Hormuz, a critical chokepoint for global oil exports, is reopening. Tanker traffic is resuming following progress toward a US-Iran peace deal, with Persian Gulf exports now restored to approximately 75% of prewar levels. But there’s an important nuance investors need to understand — passage through the Strait is currently managed on a daily quota basis, coordinated through Iran’s Revolutionary Guards Navy. This is not the same as the freely-flowing pre-war commercial navigation that existed before the conflict. Risk is reduced, not eliminated.
The Oil Price Round-Trip
Oil markets love a good narrative, and the Iran conflict provided one for the first half of 2026. When tensions escalated and the Strait of Hormuz became a flashpoint, WTI crude spiked on supply-shock fears. Now, with the ceasefire holding and tanker traffic resuming, that war premium is unwinding. The result is a textbook round-trip: oil rallied on fear, then declined as the fear subsided.
For Canadian energy investors, this creates a fundamental question: is cheaper oil good or bad? The answer, as usual, is both.
The Bull and Bear Case for Canadian Energy Stocks
On the bear side, lower crude prices pressure producer cash flow and earnings. Every dollar decline in the price of WTI translates directly to lower revenue for companies like Canadian Natural Resources (TSX: CNQ), Suncor, and Cenovus. If WTI stays in the high $60s for an extended period, production growth plans may slow, capital expenditures could be trimmed, and dividend growth might moderate.
On the bull side, Canadian energy majors are built to be cash-flow durable at mid-$60s WTI. These are not marginal producers that break even at $80 oil. CNQ, Suncor, and other large-cap names have spent the last decade optimizing operations, lowering breakeven costs, and building balance sheets that can weather commodity cycles. Many of these companies return capital to shareholders through dividends and buybacks even when oil prices are middling, not just when they’re spiking, data as of June 27, 2026.
There’s also a headline-risk argument: the war premium unwinding removes a source of volatility that has dominated energy sector trading for months. Investors who were waiting on the sidelines for geopolitical clarity now have it — or at least more of it than they did in March.
CNQ: A Case Study in Volatility
Canadian Natural Resources offers a useful case study in how energy stocks have traded through this cycle. Analysts noted that CNQ rallied sharply while oil spiked during the height of the Iran conflict, then sold off significantly after the ceasefire took hold. Some analysts argue this makes the valuation more reasonable now than it was at the peak, when the stock was pricing in sustained $80+ oil.
To be clear, we’re not making a buy recommendation on CNQ or any other specific stock. The point is that energy investors are now facing a different set of questions than they were three months ago. Instead of asking “how high can oil go if the war escalates,” the question is now “how durable are these companies if oil stays in the $65-$75 range for the next year?” For companies with strong balance sheets, low breakeven costs, and a track record of returning capital to shareholders, the answer is often “quite durable.”
For more on the recent oil price trajectory, see our June 14 coverage of the eight-week low.
TSX Context: Energy and Financials Lead
The broader TSX has been resilient through the oil decline. The S&P/TSX Composite closed June 26 near 34,980, up 0.37%, hovering near record highs around 35,000. Energy and financials have led the 2026 rally, and interestingly, lower energy costs have helped ease inflation fears, which in turn has lifted financial stocks. TD, BMO, and Brookfield each gained roughly 1% on the week, data as of June 27, 2026.
The market’s read appears to be that moderating energy prices are a net positive for the broader economy, even if they pressure energy producers in the short term. Lower gasoline prices mean lower consumer inflation, which reduces the risk of further central bank tightening — a tailwind for rate-sensitive sectors like financials and REITs.
Geopolitical Tail Risk Remains
Before anyone assumes the oil story is over, it’s worth noting that the Strait of Hormuz is operating under a quota system, not normal commercial conditions. Reports of continued fighting in Lebanon and other geopolitical flashpoints suggest the region remains fragile. A single escalation event could send tankers back to port and crude prices back above $80 in a matter of days.
This is not a prediction — it’s a reminder that geopolitical risk in the energy sector is never fully priced out. Investors who assume oil will stay below $70 indefinitely are making the same mistake as those who assumed it would stay above $80 indefinitely three months ago. Commodity markets are volatile, and tail risks cut both ways.
What Should Investors Do?
The honest answer is: it depends on your portfolio, your risk tolerance, and your time horizon. If you’re a long-term dividend investor looking for exposure to Canadian energy, cheaper valuations on high-quality names like CNQ and Suncor may present an opportunity — assuming you’re comfortable with commodity price volatility and believe these companies can generate attractive returns over a multi-year period.
If you’re a tactical trader who bought energy stocks at the peak of the war premium, the recent decline may be a signal to reassess your thesis. The round-trip is complete, and the next catalyst is unclear.
What we think is clear is this: Canadian energy stocks are not a monolith. Some are leveraged producers with high breakeven costs. Others are integrated majors with refining arms that benefit from lower input costs. Some pay dividends; others are focused on production growth. Before making any decision, understand what you own and why you own it.
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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.
