Oil shock turns into massive opportunity for Canadian energy investors
Oil just had its biggest jump in four years while traffic through the Strait of Hormuz “quickly” turned into a “worst-case scenario for energy investors” — and one Canadian manager calls it a “massive, massive opportunity” for this country.
Strength in energy helped Canada’s main stock index close higher as US and Israeli attacks on Iran raised worries about crude supplies and pushed prices up, BNN Bloomberg reports.
The S&P/TSX composite index gained 201.28 points to 34,541.27, while the April crude contract rose US$4.21 to US$71.23 per barrel.
The Canadian dollar traded at 73.06 cents US, down from 73.30 cents US on Friday, and the April gold contract climbed US$63.70 to US$5,311.60 an ounce.
Crude prices jumped more than 6 percent on fears war with Iran could “clog the global flow of crude and make inflation even worse,” AP News reports.
The same report says benchmark US crude settled 6.3 percent higher at US$71.23, with Brent up 6.7 percent to US$77.74.
BNN Bloomberg notes US crude was up 7.6 percent to US$72.12 and Brent 8.6 percent to US$79.11 in early trading as shipping bottlenecks emerged in the Strait of Hormuz.
CNBC says crude rose more than 8 percent after Iran reportedly said it had closed the Strait of Hormuz.
The New York Times reports that international crude briefly crossed US$80 before retreating to about US$77.74, roughly 7 percent higher on the day.
Bloomberg says oil surged the most in four years on a near halt to Strait of Hormuz traffic and disruption at a large Saudi refinery.
Against that backdrop, Canada is in a “unique position to step up as a stable, secure supplier of oil,” according to BNN Bloomberg.
Eric Nuttall of Ninepoint Partners told BNN Bloomberg, “We’re finding the very best opportunities remain in Canada,” pointing to decades of oil and gas inventory in the oil sands and formations such as Clearwater.
He said equity prices still lag his expectations for oil now and in the coming years, and that security of supply “has become more important overnight” after an almost unthinkable loss of about 20 percent of LNG and up to 20 percent of oil supply in a single day.
Nuttall said “all prior playbooks are not applicable,” pointing to threats of direct military retaliation by the UAE and Saudi Arabia.
He told BNN Bloomberg he has been buying more Canadian energy stocks, expects OPEC spare capacity of about 1.4m barrels per day, and warned that a new 1m‑barrel‑per‑day pipeline would take at least eight years.
He said “the world is hurtling into an energy supply crisis” and noted about 700,000 barrels per day of Canadian takeaway expansions would need US President Donald Trump’s approval.
Nuttall added that OPEC controls roughly one‑third of world supply and that 74 of 78 non‑OPEC countries are in “permanent” production decline, calling it a “massive, massive opportunity” for Canada.
US equities swung sharply. The S&P 500 fell as much as 1.2 percent before closing with a gain of less than 0.1 percent, the Dow dipped 0.1 percent and the Nasdaq rose 0.4 percent, AP News reports.
CNBC says energy, industrials, tech, and real estate were the only positive S&P 500 sectors.
AP News notes airlines and cruises were among the sharpest losers, while Exxon Mobil, Marathon Petroleum, Northrop Grumman, RTX, Nvidia and Palantir advanced.
In fixed income, the 10‑year US Treasury yield rose to 4.04 percent from 3.97 percent.
AP News says higher oil is adding “upward pressure on inflation,” which could “tie the Federal Reserve’s hands” on rate cuts.
