Oil Above $110 and Rates on Hold: 3 Canadian Energy Stocks Built for Both

Oil is not quietly elevated right now. It is dramatically elevated. Brent crude is trading above $110 a barrel today — up roughly $50 from a year ago — as the conflict in the Middle East has effectively closed the Strait of Hormuz, triggering what analysts are calling an unprecedented supply shock. Goldman Sachs estimates that exports through the chokepoint have fallen to just 4% of normal levels.

Meanwhile, yesterday the Bank of Canada held its policy rate at 2.25% for the fourth consecutive meeting and flagged inflation rising toward 3% in April. Rate cuts are no longer the obvious next move.

For Canadian investors looking to invest in energy without betting everything on oil staying above $110, today’s environment calls for selectivity. Higher oil prices can lift cash flows and valuations, but higher-for-longer rates squeeze weaker balance sheets and punish companies that need cheap capital to grow. The stocks that work in this environment are the ones with low breakevens, fee-based insulation, or enough financial discipline to keep returning cash even when the cycle turns. Three businesses stand out: Canadian Natural Resources, Tourmaline Oil, and Pembina Pipeline.

Canadian Natural Resources: A low-breakeven giant that thrives when oil stays elevated and survives when it doesn’t

Canadian Natural Resources (TSX: CNQ) is built for this setup. As one of Canada’s largest and most diversified energy producers — oil sands, conventional oil, and natural gas all feeding into the mix — it has the scale and the balance sheet to generate significant cash flow when oil prices are strong, and the low cost structure to keep generating it even when they aren’t. Its WTI breakeven sits in the low-to-mid US$40 range, which means at current prices, the margin is substantial.

The 2025 numbers showed what that looks like in practice. CNQ generated adjusted net earnings of $7.4 billion, adjusted funds flow of $15.5 billion, and ended the year with a debt-to-adjusted-EBITDA ratio of just 0.7 times. Management raised the dividend by 6.4% — its 26th consecutive year of dividend growth — and accelerated its shareholder return framework. For 2026, production guidance sits at 1.615 million to 1.665 million barrels of oil equivalent per day.

Q1 2026 results are due May 7, which should give investors a good read on how the company is performing into the oil price spike. With the trailing P/E around 12.5 and a 3.9% yield at current prices, CNQ is not cheap by historical standards, but it looks reasonable for a giant with this much financial strength and commodity tailwind behind it.

Tourmaline Oil: Canada’s largest gas producer, with LNG exposure that’s becoming more relevant by the week

Tourmaline Oil (TSX: TOU) is the gas-heavy version of the same idea, and it fits this moment for a specific reason beyond just elevated energy prices. As Canada’s largest natural gas producer, Tourmaline has been building out LNG export exposure at a time when European buyers — including Germany’s Uniper — are actively exploring Canadian LNG as an alternative to Middle Eastern supply. That is not a future story anymore; it is a current one.

The company’s most recent results confirmed its underlying strength. Tourmaline reported Q4 2025 cash flow of $890 million and full-year 2025 cash flow of $3.4 billion. Q4 production hit a record 659,204 boe/day, with January 2026 production topping 685,000 boe/day before an asset sale. The company cut net debt sharply, from $2.3 billion in Q3 2025 to $1.5 billion at year-end, and reduced 2026 capital spending by $350 million. Full-year 2026 production is expected at 620,000 to 640,000 boe/day. The trailing P/E looks high because of non-cash items hitting reported earnings — the forward picture is considerably cleaner. The base dividend yields around 3.2% at current prices, with special dividends returning if commodity pricing warrants.

Next earnings are due May 6. For Canadian investors who want gas exposure with LNG optionality and a clean balance sheet, Tourmaline is worth researching further.

Pembina Pipeline: Fee-based protection and a 4.7% yield

Pembina Pipeline (TSX: PPL) brings something to the table that the other two stock don’t: a business model that doesn’t live or die with commodity prices. As a pipeline and midstream operator, Pembina mainly needs volumes, contracts, and a solid project backlog. That makes it genuinely useful when oil is up but rates are also sticky — investors often want to own at least one business with dependable cash flow and limited direct commodity exposure. Pembina has that, reinforced by its take-or-pay contract structure and its ongoing integration of Alliance and Aux Sable.

The 2025 full-year results were solid. Pembina reported earnings of $1.694 billion, adjusted EBITDA of $4.29 billion, and adjusted cash flow from operating activities of $2.854 billion. Q4 adjusted EBITDA came in at $1.075 billion. For 2026, management guided for adjusted EBITDA of $4.13 billion to $4.43 billion, with the midpoint supporting longer-term growth targets. Q1 2026 results are due May 7. Shares trade at roughly 23 times earnings, which is not a bargain for a pipeline stock — but the business is steadier than most producers, and at current prices the yield sits around 4.7%. For a Canadian investor who wants income and energy exposure without full commodity price risk, Pembina earns its place alongside the other two.

Bottom line

When oil is above $110 and the Bank of Canada is holding rates while warning about inflation, investors need energy stocks that can handle both pressures at once. CNQ brings low-cost scale and 26 years of consecutive dividend growth. Tourmaline brings gas production, LNG optionality, and a balance sheet that’s been cleaned up considerably. Pembina brings fee-based stability and a yield that makes holding through volatility easier. Together, that is a mix of torque and defence — and even $7,000 in each can start building meaningful income.