TSX Energy Stocks Poised to Thrive Amid Tariffs and Oil Price Volatility
The TSX energy sector has shown resilience in the face of tariffs, war, and rising oil prices. According to Stockcalc's analysis, Canadian oil and gas companies are well-positioned to benefit from these developments.
Canadian crude appears insulated from US tariffs due to its high demand among US refineries, which are configured specifically for Canadian heavy crude. The Trans Mountain Expansion has also improved Canada's access to Pacific markets, reducing dependence on US refineries and decreasing transportation-related Western Canadian Select (WCS) discounts.
The Strait of Hormuz plays a crucial role in global oil trade, with 20-21 million barrels per day passing through it. A decline in oil prices due to an agreement would significantly reduce the windfall for producers, which could be substantial: Suncor Energy Inc.'s Adjusted Funds from Operations (AFFO) increase by approximately $215-million for every US$1/bbl rise in WTI.
The analysis divided TSX-listed oil and gas companies into three groups: those with direct oil exposure, midstream companies, and others. Companies like Canadian Natural Resources Ltd., Suncor Energy Inc., and Cenovus Energy Inc. will see their AFFO move directly with the price of oil.