Oil prices have surged once again to US$79/barrel after a brief period of cooling off at US$70 at the end of June. Oil prices will remain volatile as the United States-Iran negotiations progress, with neither side agreeing to the terms laid out by the other. Rising oil prices forced the Bank of Korea to hike interest rates by 25 basis points to curb inflation triggered by higher energy costs, as per a CNBC report dated July 15.
This time, the price has been contained below US$80, unlike the March 2026 shock that pushed the WTI price above US$100. These price spikes will gradually normalize in a year or two as oil-importing countries diversify their sources and reduce demand by shifting to alternative energy sources.
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Three Canadian energy stocks to watch as oil headlines heat up
Canada has the world’s second-largest oil sands reserves. Its economy depends significantly on oil and natural gas exports to the United States. The whole oil supply chain disruption from geopolitical tensions post-pandemic has benefited Canadian energy companies. The US tariffs in 2025 threatened Canada’s energy exports, encouraging Canada to diversify its oil exports to Asia and Europe. This gave the green light to many energy infrastructure projects.
The latest ambitious project under discussion is the West Coast Oil Pipeline (WCOP), which will make Alberta oil available to the world. The three oil and gas companies are a part of the five-company Oil Sands Alliance (OSA), which has agreed to build a carbon capture and storage project along the WCOP path. While this project will take almost a decade to materialize, the recent oil price shocks will benefit the three companies below.
Cenovus Energy
Cenovus Energy (TSX:CVE) saw a breakthrough in its balance sheet after 2021 as rising oil prices turned around the integrated oil company. Until 2020, Cenovus suffered from high production costs, which made it less competitive. However, the continued high oil prices have helped Cenovus pay regular dividends since 2021 and grow them by double digits in the last five years.
Cenovus acquired MEG in November 2025 for $3.4 billion in cash, which increased its net debt to $8.3 billion in the fourth quarter of 2025 from $5.3 billion in the previous quarter. The acquisition immediately adds approximately 110,000 barrels per day of low-cost, long-life oil sands production to Cenovus. The timing couldn’t have been more perfect as oil prices skyrocketed in March 2026, and Cenovus is using the surplus cash flow to reduce its net debt to its target of $4 billion in the long term.
The MEG acquisition has increased Cenovus’s oil production, as well as sensitivity to oil prices. For every US$1 increase, adjusted funds from operations (AFFO) increases by $220 million. Thus, Cenovus’s share price surged 58.8% year to date, outperforming other energy stocks.
Suncor Energy
Suncor Energy (TSX:SU) stock price surged 23% year to date. Unlike Cenovus, Suncor is not increasing its capacity. In fact, it is focusing on reducing its WTI breakeven by another $5/barrel after lowering it by US$10 in 2025. The company has maintained its net debt at $8 billion and is focusing most of its capital spending on sustaining oil sands reserves.
For every US$1 of change in WTI, Suncor’s AFFO increases by $215 million. Its price sensitivity is slightly lower than Cenovus’. Moreover, Suncor’s dividend growth has been between 4.6% and 5.3% during the 2024–2026 period, lower than that of Cenovus.
Suncor offers long-term stability even in a downcycle, which makes it a preferred energy stock.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) stock has surged 28% year to date, with a peak surge of 64% till March 31, 2026, and a correction of 17.6%. It has relatively lower sensitivity to oil than Cenovus and Suncor because of its diversified product mix. Canadian Natural Resources produces oil, natural gas, and synthetic crude. Like Cenovus, Canadian Natural Resources has also been expanding its oil sands reserves and production capacity and using the increased output to repay debt. The company aims to reduce its net debt to $13 billion from the current $16.1 billion, and use free cash flow to buy back shares. Its disciplined capital allocation on expansion helps the stock reduce its sensitivity to oil price volatility.
