With the trade war breaking out and Canada and Mexico retaliating against the U.S., will oil prices rise? Can the Federal Reserve still cut interest rates?

The U.S. Midwest accounts for 23% of the nation’s refining capacity and is highly dependent on Canadian crude oil supplies. Now, pipelines that previously transported oil from the Gulf of Mexico to the Midwest have reversed direction, making it difficult for refiners in this region to access alternative crude grades. Goldman Sachs analysts Samantha Dart and Daan Struyven warned, “Tariffs on Canadian oil could prove unpopular in the U.S. Midwest—even if only temporarily.” To minimize upward pressure on gasoline and heating oil prices, White House officials set a relatively low tariff rate of 10% on Canadian energy imports. U.S. refiners have expressed concern over the tariff policy. Last week, fuel producers warned that tariffs would erode refining margins and disrupt petroleum markets. Executives at Valero said U.S. refineries might lower their run rates as a result, while Phillips 66 cautioned that Canadian crude prices would fall sharply. Chet Thompson, president of the American Fuel & Petrochemical Manufacturers association, stated in an email: “We hope to quickly reach a resolution with our North American neighbors to remove crude oil, refined products, and petrochemicals from the tariff list before consumers feel the impact.” The precise implementation details of the tariff policy will determine its market impact. If producers are allowed to export oil from the U.S. Gulf Coast to non-U.S. buyers without tariffs, the blow to Canadian oil prices would be mitigated. Moreover, it remains unclear how the tariffs will affect Western Canadian crude shipped through the U.S. to refineries in Ontario and Montreal. Still, he noted that Canadian producers may partially benefit from a weaker Canadian dollar, and the typical maintenance season in the oil sands—beginning around April—could reduce crude output, helping to offset the tariff impact: “I’d even say most stocks have already priced in a 10% tariff.” Western Canadian Select (WCS) crude has already weakened amid tariff expectations, trading $15.50 per barrel below WTI on Friday—the widest discount since July 30. Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, expects the 10% tariff could widen the spread further to $16–$17 per barrel. Mexico’s oil industry may also face disruption. If U.S. refiners shift to other suppliers, Petróleos Mexicanos (Pemex) may need to increase long-haul sales to Europe and Asia, squeezing its profit margins.

After oil producers posted massive profits, have stakeholders also received their share?

Currently, energy stocks yield more than so-called high-yield indices. The Energy Select Sector SPDR Fund (XLE), which holds major energy companies, delivered a 41% dividend growth last year and yields 4.2%, compared with the Vanguard High Dividend Yield ETF (VYM)’s 3.2% yield. Oil producers have also outperformed the S&P 500’s “Dividend Aristocrats”—stocks with reliable histories of annual dividend increases. The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) yields just 2.2%. Morningstar analyst David Meats said: “The sector has permanently transitioned into nearly high-yield income territory. But that doesn’t mean the numbers you see today will persist.” He added that today’s elevated yields compensate investors for the additional risk inherent in these cyclical stocks. When investors get paid, oil and gas producers do too. Stacey Morris, Head of Energy Research at Alerian VettaFi, said: “Energy is trying to escape the ‘sin stock’ zone.” She noted that increased dividends aim to attract new, long-term investors and reduce volatility in cyclical energy stocks. She pointed to evidence suggesting energy stock volatility is easing—and decoupling from crude oil volatility—partly due to these substantial payouts. The question remains whether they can sustain these high dividends if oil prices fall further. She said: “What proves your ability to pay dividends is economic downturns.” Answering that question takes time. Dividend Aristocrats earn their title only after raising dividends for 25 consecutive years. Among the 64 Dividend Aristocrats in the S&P 500, only two are oil and gas producers: ExxonMobil and Chevron. Some portfolio managers are making long-term bets on the sector’s income potential. For example, Toronto-based Ninepoint Partners launched a new energy income fund, with 85% of its weight allocated to oil and gas producers. Its largest holdings include oil sands producer Cenovus Energy Inc., natural gas producers Chesapeake Energy Corp. and Coterra Energy Inc., and shale favorite Devon Energy Corp. Rafi Tahmazian, partner and senior portfolio manager at Canoe Financial, said on the phone: “Oil and gas are no longer a ‘boom-or-bust’ investment.”

Ninepoint Partners Secures 6,500% Return on Athabasca Oil Investment

17 hours ago

Cenovus Energy agreed to acquire Athabasca Oil Corp at C$12 per share, enabling Ninepoint Partners to realize a 6,500% return on its earlier penny-stock investment.

bloomberg

2026-10-05

Ninepoint Partners Secures 6,500% Return on Athabasca Oil Investment

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