Iran Conflict's Long-Term Oil Supply Risks in Prices & Energy Sector

Added: 2026-05-26

[00:00:00]Let's talk energy. I wanted to get closer look at the energy sector. Crude oil is moving lower today on optimism for potential US Iran deal, the peace talks.

[00:00:10]All right, our panel is here. Benoit Gervais is with us, head of resource team, Mackenzie Investments, and Stewart Glickman, deputy research director and energy equity analyst at CFRA. Now, a lot of Wall Street is betting on the peace talks and that the US is doing self-defense, you know, shooting back, and that they think that they're making progress. What say you, Stewart Glickman?

[00:00:33]Uh hi, Nicole. Uh so, uh I think we we've heard this movie before, right?

[00:00:37]We've been really close to a deal. Uh I don't know how many times in the last 3 months. To me, we seem no closer.

[00:00:44]Uh I'm concerned that um the the loss of arguably 10 or 11 million barrels a day off of global markets, that's about 10 or 11%, uh is eventually going to catch up with us in the form of much higher prices. Uh so, I think um you know, it's possible this time we really do have a deal, but uh you know, it color me skeptical at this point.

[00:01:07]So, worried or skeptical at this point.

[00:01:09]What do you say, Benoit?

[00:01:12]Well, what's pretty clear is that on the other side of this, energy prices will be higher. However and whenever this gets resolved is that this perception that there was a surplus of available energy in general and in particular in this case, we have oil and products uh in question in that street high concentration level is that on the other side of this that the uh uh energy prices coming from secure places will probably trade at a premium. That's the first thing.

[00:01:42]And long-term energy in general will probably trade at a premium after this uh peace than where we were before um uh February 28th.

[00:01:54]Mhm, higher for longer on oil. There are many people who think it comes down.

[00:01:59]Stuart, what is the projection there at CFRA?

[00:02:03]So, I think short-term, certainly the the likelihood is that prices move higher from here. I think considerably higher.

[00:02:11]I think that we've had that effect masked so far because of floating storage and the use of other inventories to kind of from those effects.

[00:02:22]My my concern is that when crude oil prices move much higher, we're going to throw this economy into recession or at least meager economic growth, and I think that will take a toll in 2027.

[00:02:35]So, I think that prices next year probably come down.

[00:02:39]All right, at this point now, you know, you're you're saying that it seems like that there's pressure and that nothing is to happen. Stuart, does something turn around? I mean, do we have opportunities in the energy sector maybe if this doesn't even come through?

[00:02:54]I mean, assuming this goes on longer, Stuart, what are the opportunities for investors in energy?

[00:03:01]Well, I I think Ben was Ben was point is a good one about stability of supply. I do think that there's going to be a premium placed around that. I think that companies that are involved in crude oil logistics within the US, the ability to move more crude oil to the Gulf Coast for export, for example, is going to be promising.

[00:03:22]I think that um refiners at the moment look interesting because the the spread between Brent and WTI, although they're a little closer than they had been, have have risen dramatically since the onset of this war. When when spreads widen, refiners tend to do better. So, we think that, you know, downstream and midstream looks looks plenty appetizing at the moment.

[00:03:46]Are you able to share any favorite names or not necessarily right now?

[00:03:50]Sure. So, Energy Transfer is one, uh ticker ET, uh one of the leading um uh liquids-focused uh companies uh in the US. Also exposure to LNG.

[00:04:04]Uh LNG trade uh is going to be uh significantly affected by the attacks that have happened on Qatar.

[00:04:11]Uh about 20% of global LNG trade has been knocked out at least temporarily.

[00:04:16]Uh so, a name like a Cheniere Energy looks very attractive to us.

[00:04:20]Uh also ticker LNG there.

[00:04:22]And on the gas side, I would say Valero Energy.

[00:04:26]Okay, great. Um Energy Transfer, Cheniere, Valero. Um Benoit, when we look at what's going on with China, um you said they're approaching energy security a little bit differently than us. What What do you mean by that and what do we need to know?

[00:04:42]So, I think what's really the big play is energy sovereignty going forward, especially given what's happening in the straight. Everybody's looking at their supply chain and says, "We'll probably have to uh continue to source some energy from the countries uh that are in the conflicts, but there's many conflict zones around the world, and everybody's left back saying, "Well, maybe there is too much exposure to those conflict zones."

[00:05:10]Um and China has been thinking about securing supply chain given its size for many, many years, and I think it's pretty clear that China wasn't going to have all the fossil fuel it needed for its future. It needed an alternative or depend on the rest of the world, which I don't think any country would would like. They would prefer to source this and be sovereign. So, in their case, they chose to go with a combination of fossil fuel, but also be leaders when it comes to renewable energy. And that's something you can control in your country, especially if you're manufacturing a lot of those technologies, so solar panels for instance, they are a leading economy producing very cheaply, very efficiently electricity. So if you combine cheap electricity, especially today when everybody's thinking about artificial intelligence, to fossil fuel, which you have to source outside, you can diminish greatly your exposure to conflict zones. And I think that most countries today are thinking of China as a leader when it comes to strategizing their energy sovereignty going forward. Uh the US, and Europe in particular, are going to be looking at preferred suppliers, if you like, when it comes to energy to set up their future.

[00:06:32]Okay. Ben Wajdi Base and Stewart Glickman, thank you both. Good to see you. Appreciate it.