Canadian oil and gas producers anticipate sharply higher profits in 2026 as prices surge due to the Iran war but will channel those earnings back to shareholders rather than invest in major new capital projects, senior executives said on Tuesday. At an annual conference in Toronto, the executives acknowledged their companies’ financial fortunes have changed dramatically in the wake of the Middle East conflict that has disrupted global oil and gas supplies and sent global crude benchmarks Brent and West Texas Intermediate soaring. But in Canada, the world’s fourth-largest oil producer, the commodity price shock will not translate into a dramatic uptick in drilling or a quick sanctioning of a new oil sands project, CEOs said. They pointed to uncertainty about how long the high prices will last as well as ongoing concern about perceived regulatory and policy barriers in the country.
“We are a commodity-based business. When we see global prices rise for energy, we participate in that,” said Jon McKenzie, CEO of Cenovus Energy, one of Canada’s largest oil sands producers, in an interview.
“But I don’t think it’s going to have any strategic or long-term impacts on anybody’s operating plans at this point.”
OIL PRICES HIGHER THAN EXPECTED
Many Canadian energy companies went into 2026 anticipating WTI prices would average around $60 a barrel, but since the war began, prices have surged into the $90 to $100 a barrel range. For producers, this will mean a “massive” change in profitability compared to 2025, said Mike Verney, executive vice president at consultancy McDaniel & Associates. “Our cash flow was going to be at about C$650 million ($472.21 million),” said Brian Schmidt, CEO of Tamarack Valley Energy. “And what we’re forecasting now, it’ll probably be somewhere around C$1 billion.”
But Schmidt said unless a new crude export pipeline is built in Canada, the country’s oil producers cannot significantly increase their output because existing pipeline capacity is nearly maxed out. Executives also expressed uncertainty about their ability to grow unless the Canadian and Alberta governments reach an agreement with industry soon on industrial carbon pricing, a policy that Canada’s oilpatch has said threatens its competitiveness globally.
The Iran war has changed Tourmaline Oil’s cash flow expectations for this year and likely for next year as well, said Jamie Heard, the company’s vice president, capital markets.
While those cash flows are not yet expected to reach 2022 levels — when the Canadian industry as a whole reaped record profits due to the Ukraine war and resulting global commodity shock — they could creep close to that range, he said.
Tourmaline will return the bulk of its Iran-related profits to shareholders, Heard said, possibly in the form of a special dividend. “But we understand war premiums to be fickle and so we want to earn those cash flows before we announce new allocations,” he added.
(Reporting by Amanda Stephenson in Calgary; Editing by Jamie Freed)