Canadian oil companies expected to ‘benefit disproportionately’ during the war in Iran
BNN Bloomberg
Canadian oil stocks are poised for a significant rally as the war in Iran continues and increases oil price volatility, according to an energy analyst.
Cenovus Energy, in particular, was upgraded to a “strong buy” on Wednesday by research analyst Darryl McCoubrey of Veritas Investment, with the company’s stock trading 3.4 per cent higher at $31.85 Wednesday midday, nearly reaching its yearly peak of $32.62.
In the event of a price spike, Canadian companies Cenovus and Canadian Natural Resources both “benefit disproportionately compared to the other oil sands majors,” because they are both sensitive to a West Texas Intermediate (WTI) price hike,” McCoubrey told BNN Bloomberg.
“So we increased both of those valuations by nearly 30 per cent,” he said.
McCoubrey said he shifted from a supply glut outlook to a high-risk scenario after oil prices surged as the conflict in Iran sparked fears of a global oil supply disruption.
He said Canadian Natural Resources, which was trading 2.5 per cent higher Wednesday midday, performed relatively well compared to Cenovus Energy over the last month, but Cenovus stands out as being relatively levered to the current high-price environment.
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