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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West Texas Intermediate crude closed Friday at US$84.73 per barrel — down more than 3% to an eight-week low — on rising hopes that the United States and Iran are nearing an interim deal that could reopen the Strait of Hormuz, potentially in time for the upcoming G7 meeting (data as of June 12, 2026).
The decline reflects the market pricing in the possibility of reduced geopolitical risk and increased global oil supply. But the story is far from settled. Iranian media published a draft proposal with different terms, and President Trump publicly stated it does not reflect the agreed terms. In other words, this de-escalation is not confirmed — and the oil price could reverse just as quickly as it fell.
For Canadian investors holding or considering energy stocks, the question is simple: is this an oversold opportunity, or is the sector still overexposed to downside risk?
The Bull Case: Canadian Energy Stocks May Be Oversold
If the US-Iran deal stalls or fails to produce a meaningful reopening of the Strait of Hormuz, oil prices could rebound sharply. An eight-week low means energy stocks like Suncor Energy (TSX: SU), Canadian Natural Resources (TSX: CNQ), Cenovus Energy (TSX: CVE), and Tourmaline Oil (TSX: TOU) have already priced in a fair amount of downside.
We saw this pattern in early 2025 when geopolitical tensions initially drove oil higher, only to see a pullback when diplomatic progress emerged. The companies themselves remain operationally strong. Canadian energy producers have improved balance sheets, reduced debt loads, and shareholder-friendly capital allocation strategies — including dividends and buybacks.
If oil rebounds from current levels, Canadian energy stocks could deliver outsized gains relative to broader equity markets. The contrarian case is that the market overreacted to unconfirmed peace hopes.
The Bear Case: Geopolitical Risk Cuts Both Ways
On the other side, if the Strait of Hormuz does reopen and Iranian oil supply returns to global markets, energy prices could fall further. Canadian energy stocks remain highly exposed to global commodity price volatility — a reality that no amount of operational excellence can fully eliminate.
The long-term energy transition toward renewables also remains a structural headwind. While Canadian energy producers have adapted by focusing on cost efficiency and capital discipline, the sector’s growth potential is capped by the global shift away from fossil fuels.
In short, the bear case is that oil at US$84.73 is not oversold — it is fairly priced given the balance of geopolitical risk, supply dynamics, and long-term demand trends.
Key Risks to Watch
Whether you are bullish or bearish on Canadian energy stocks, these are the variables to monitor in the coming weeks:
- US-Iran negotiations: Watch for confirmation or rejection of the interim deal. If the Strait of Hormuz reopens, oil supply increases and prices fall further.
- OPEC+ production decisions: Any shift in production quotas will directly impact global oil prices and Canadian producer profitability.
- Global demand signals: Weak economic data from China or Europe could reduce demand for oil, putting additional downward pressure on prices.
- Currency effects: A stronger Canadian dollar reduces the loonie-denominated revenue Canadian producers earn from US-dollar-priced oil exports.
The risk-reward profile for Canadian energy stocks right now depends entirely on your view of these variables. If you believe geopolitical risk remains elevated and oil is oversold, the sector offers value. If you believe the de-escalation is real and oil prices will continue to fall, exposure to energy stocks increases portfolio risk.
How to Hold Energy Stocks Tax-Efficiently in Canada
Here is where the actionable, genuinely useful guidance comes in — regardless of whether you are bullish or bearish on energy, holding these stocks in the right account structure matters.
If you are investing in Canadian energy stocks like Suncor, Canadian Natural Resources, Cenovus, or Tourmaline, a TFSA is an excellent choice. Canadian eligible dividends and capital gains grow completely tax-free in a TFSA, and there is no withholding tax issue because these are Canadian companies. Every dollar of dividend income and every dollar of capital gain you earn stays in your account — no tax drag whatsoever.
If you are investing in US energy stocks like ExxonMobil or Chevron, hold them in an RRSP instead. The Canada-US tax treaty exempts the 15% US dividend withholding tax on US stocks held in an RRSP. If you hold US energy stocks in a TFSA, that 15% withholding tax is deducted and unrecoverable — which means you are giving up a significant portion of your dividend income for no reason.
This is not theoretical advice. It is a concrete tax-planning decision that directly impacts your after-tax returns. Canadian energy stocks belong in a TFSA. US energy stocks belong in an RRSP. Get the account structure right from the start.
Where to Open an Account
If you are ready to build your Canadian energy portfolio in a tax-efficient account structure, Questrade is one of the best platforms for Canadian investors. Questrade offers the lowest commissions for active stock trading, and ETFs are always free to buy — which means you can build a diversified energy portfolio without paying trading fees on every transaction.
Open a Questrade account today and get $50 in free trades to get started.
Final Thoughts
Oil at an eight-week low is a headline — not a recommendation. The sector is volatile, geopolitical risk is unresolved, and the long-term energy transition remains a structural headwind. But for investors who understand the risks and want exposure to Canadian energy stocks, the current pullback may offer value.
What matters most is not just what you buy, but where you hold it. A TFSA for Canadian energy stocks. An RRSP for US energy stocks. Get the tax structure right, and you keep more of what you earn.
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.
