Financial Insights That Matter
Written by Brian Paradza, CFA at The Motley Fool Canada
Canadian investors face a mix of geopolitical turbulence, transformative infrastructure projects, and shifting global energy dynamics as Canada’s energy sector stocks brace for a pivotal year in 2025. From President Trump’s tariffs to the long-awaited Trans Mountain pipeline expansion, here’s what you need to know to navigate this high-stakes landscape—and which stocks could thrive.
The U.S. imposed, then delayed, a 10% tariff on Canadian energy imports in February 2025, targeting crude oil and natural gas. While this threatens Canada’s oil-dependent economy (about 80% of energy exports historically went to the U.S.), the impact varies across companies.
Integrated oil producers like Imperial Oil are largely insulated, with about 81% of revenue generated from domestic refining and retail operations. Only a small fraction of its sales face direct exposure to U.S. tariffs. Similarly, Suncor Energy (TSX:SU), with its extensive Petro-Canada retail network, refines over half of its production domestically, reducing its vulnerability to trade tensions.
However, some energy plays like Cenovus Energy stock face higher risks, as roughly 50% of revenue comes from U.S. refineries. This disparity has accelerated efforts to diversify exports beyond the U.S., a strategy made possible by the recent completion of the Trans Mountain Pipeline Expansion (TMX). This project, now operational, increases Canada’s oil export capacity to 890,000 barrels per day, opening critical access to Asian and European markets.
Economists expect global oil prices to hover near US$70 per barrel in 2025, though risks of oversupply loom. The usual key factors influencing prices include OPEC+ production cuts aimed at stabilizing markets, growing energy demand from India and China, and the potential for U.S. shale producers to flood markets if drilling accelerates.
Amid this uncertainty, Canadian producers like Canadian Natural Resources (TSX:CNQ) are focusing on volume over price. The company plans a 12% production increase in 2025, targeting up to 1.55 million barrels of oil equivalent per day. With vast reserves, low-decline assets, and industry-leading low breakeven costs, CNQ stock is well positioned to profit even in a lower-price environment.
Suncor stock stands out for its vertical integration, spanning oil sands extraction to refineries within Canada and its expansive retail network of 1,585 Petro-Canada gas stations. This structure helps buffer against oil price volatility. The company’s upstream production reached a record 827,600 barrels per day in 2024, and management guides for production to range between 810,000-840,000 barrels per day in 2025 — a new record is possible.
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