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.
Affiliate Disclosure: Bestcanadianstocks.ca may earn a commission when you open an account or make a purchase through links on this page. This comes at no additional cost to you and helps us continue providing free financial content to Canadian investors.
Oil prices jumped Wednesday morning after reports that the United States launched strikes on Iran, with WTI crude trading above US$74 as geopolitical tensions in the Middle East escalated sharply.
Canadian energy stocks rallied Tuesday, with Canadian Natural Resources, Suncor, Imperial Oil, and Cenovus all gaining more than 3% as oil prices climbed on renewed supply fears. The moves highlight how quickly geopolitical risk can reshape the energy-heavy S&P/TSX Composite Index and what that volatility means for Canadian investors.
What Happened
The escalation began Tuesday when Iran attacked a tanker from Qatar near the Strait of Hormuz. According to reports, Iran targeted a Qatari LNG carrier and a Saudi oil tanker in the strait, which handles roughly 20% of global oil traffic.
Also Tuesday, the US Treasury Department revoked the waiver that had allowed Iran to sell its oil. A US official told CNBC that “Iran will only reap benefits if they exhibit good behavior,” and that Iran’s actions in the Strait were “wholly unacceptable to the United States and will be met with consequences.”
The United States launched strikes on Iran, according to reports Wednesday. President Trump said that as far as he is concerned, the ceasefire is over. According to reports, Iran claims it targeted 85 US military sites in Bahrain and Kuwait.
The strikes follow an interim US–Iran peace agreement that had been in place while the two sides negotiated a permanent end to their war. Roughly three-quarters of Canadian firms surveyed by the Bank of Canada in its Q2 Business Outlook Survey reported cost increases related to the Middle East war, making the latest escalation relevant to the broader Canadian economic outlook.
Oil Prices Jumped
WTI crude for August delivery rose 2.8% to US$70.44 on Tuesday, then climbed further after hours. By Wednesday morning, WTI was trading above US$74, up roughly 6% intraday as of July 8, 2026.
Oil prices moved quickly throughout the Wednesday session, and the intraday volatility underscores how fast geopolitical developments can shift commodity markets.
Canadian Energy Stocks Rallied Tuesday
The S&P/TSX Composite Index closed up 0.2% to 35,273 on Tuesday — just below Friday’s record close of 35,275.
Energy stocks led the index higher:
- Canadian Natural Resources (CNQ.TO): +3.2%
- Suncor Energy (SU.TO): +3.2%
- Imperial Oil (IMO.TO): +3.0%
- Cenovus Energy (CVE.TO): +3.5%
The gains came as oil prices climbed on the news of the tanker attacks and the revoked waiver.
Financials were mixed Tuesday: Royal Bank rose 0.5%, TD Bank gained 0.6%, and Bank of Montreal climbed 1.2%, while Scotiabank and Brookfield declined roughly 1%.
On the other side of the tape, mining stocks declined as gold prices fell. Agnico Eagle dropped 3.2%, Wheaton Precious Metals fell 3.2%, and Barrick Gold declined 3.5%. The contrast was notable — just days earlier, gold miners had helped lift the TSX to its record high.
What It Means for the TSX
The S&P/TSX Composite is an energy-heavy index, and Tuesday’s session showed it: the four large energy names above led the index to within a few points of Friday’s record close, even as gold miners pulled in the opposite direction.
If oil prices remain elevated, it could feed inflation expectations. The Bank of Canada’s Q2 Business Outlook Survey showed that firms expect inflation to run between 3% and 3.5% over the next year, and roughly three-quarters of firms reported cost increases tied to the Middle East war. Higher oil prices could add pressure to that already-elevated outlook.
The Bank of Canada is scheduled to announce its next rate decision and Monetary Policy Report on July 15. The policy rate sits at 2.25% after five consecutive holds, and markets are pricing in a roughly 96% probability of another hold. Rising oil prices add a new variable to the inflation picture one week before that decision.
Fed minutes from the June meeting are due Wednesday afternoon, which could shift market focus depending on what policymakers signal about the US inflation and rate path.
Key Risks
Geopolitical risk cuts both ways. If the United States and Iran resume talks or reach a de-escalation agreement, oil prices could reverse the recent gains quickly. An interim peace agreement was in place before this week’s attacks, and a return to negotiations could cool oil prices as quickly as they rose.
Oil price volatility can hurt as much as it helps. Canadian energy stocks rallied Tuesday, but a sharp reversal in oil prices could pull those gains back just as quickly.
For Canadian investors holding energy stocks, the current rally is a reminder of how sensitive the sector is to global events. For those considering exposure to energy or dividend-paying Canadian stocks, understanding that volatility is critical before committing capital — as is choosing the right platform, which our guide to the best investing apps in Canada covers.
Ready to Invest in Canadian Stocks?
New to investing in Canada? Questrade makes it easy to get started with a self-directed account. Open your account today and receive $50 in free trades to get started. Visit Questrade.
Data as of July 8, 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.
