The world watched the outcome of the United States mid-term elections on November 3. The stock market swung into action as the vote count skewed towards the Democrats. After all, US President Donald Trump has been stirring up the global economy. His decisions have faced a lack of support from several countries, be it the Iran war, the tariff war with Canada, or accelerated spending on artificial intelligence (AI). So, when Trump lost the mid-term elections, oil and AI stocks crashed over fears of policy reversals. As one of the largest oil sands operators, Canadian Natural Resources (TSX: CNQ) got swept in the sell-off.
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Why did Canadian Natural Resources stock fall 10%?
Canadian Natural Resources stock fell 10% in the first five days of November. The largest dip was 7.7% on November 4, after the election results were out. Even the WTI crude price has dropped 14% since October 30 over hopes of US-Iran peace talks. In an interview with CNN on November 1, Trump said restarting the war with Iran is “highly unlikely” if there is a strong agreement over Tehran’s nuclear program and reopening the Strait of Hormuz.
Now that Democrats have won the US mid-term elections, the US-Iran peace talks could see some progress. The Iran war is of specific interest to Canadian Natural Resources as the war has inflated oil prices above US$100/barrel. That brings in surplus cash to CNQ, which has a WTI breakeven of mid-$40s/barrel.
The 10% dip was an expected correction to the CNQ stock price surge in October after the Houthi attack on Saudi Arabia inflated oil prices. The future of the Iran war is still uncertain as Trump still holds veto power. Moreover, the peace talks are not as easy as they seem.
Is Canadian Natural Resources a buy at the dip?
Canadian Natural Resources is a dividend aristocrat because of its impeccable financial discipline in navigating geopolitical tensions. On one side, the Iran war uncertainty has kept oil prices inflated. On the other side, Canada’s proposed West Coast oil pipeline, now known as Pacific Link, is opening new export markets for its production. The company is well aware that projects can fall apart with one policy decision, as it happened with the Keystone pipeline.
Thus, Canadian Natural Resources used this energy upcycle to reduce debt and accumulate cash. As per its free cash flow (FCF) allocation policy, it will use 100% FCF to buy back shares once net debt reaches its target of $13 billion. While it has achieved this target, it did so by increasing cash reserves. Just like households, companies hold on to more cash in uncertain times. If interest rates rise and there are not many exciting acquisition opportunities, CNQ might as well pay down debt to unlock returns from lower interest expense.
| CNQ debt ($ billions) | Sep 30 2026 | Jun 30 2026 | Sep 30 2025 |
| Long-term debt | $16.60 | $17.14 | $17.27 |
| Cash and cash equivalents | $4.52 | $2.62 | $0.11 |
| Net debt | $12.08 | $14.53 | $17.16 |
Canadian Natural Resources’ management will buy back $1.6 billion worth of shares in the last two months of 2026, which is 42% of the $3.8 billion spent on share buybacks year to date. The accelerated buyback could help slow earnings per share (EPS) decline from falling oil prices. Moreover, a lower share count will create room for higher dividend growth.
Canadian Natural Resources stock is a buy right now to lock in a 3.7% annual dividend yield and expected high-single-digit dividend growth in March 2027.
A contrarian hedge against falling oil prices
If you are worried about an energy downturn and want to hedge your portfolio, consider buying gold stocks. Lundin Gold is a stock worth considering for its low all-in sustaining cost. As oil prices ease, central banks worldwide rush to fill up their gold reserves before the next escalation. This contrarian relationship between gold and black gold can protect your portfolio from extreme volatility in oil prices.
