Canadian Natural Resources (TSX:CNQ) stock has slipped 16% in June as the U.S. and Iran hold a ceasefire and allow oil ships to pass. It was known from March, when the war first began, that the negotiations would drive the price of energy stocks. The Iran war was of particular relevance to U.S. energy companies as most of their oil supply goes through the Strait of Hormuz. Hence, when the passage opened, West Texas Intermediate (WTI) prices fell 30% from $96 to below $67/barrel in June alone. Most Canadian energy companies have kept the WTI benchmark at $50/barrel.
While you know the reason for the June dip, the question is whether this dip is a buying opportunity.
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Is the Canadian dividend stock a buy after the dip?
As one of the world’s largest oil sands reserves, Canadian Natural Resources not only has ample oil and gas to mine, but it also has the infrastructure to mine it efficiently at a cost of mid-US$40/barrel.
Canadian Natural Resources faced pressure in January when Venezuela’s oil crisis opened the roads for Venezuelan oil to flow into American refineries and the global oil market. Even though Venezuela has the world’s largest oil reserves, the lack of energy infrastructure makes it less accessible.
Canadian Natural Resources sustained the 2016 oil crisis when the U.S. shale gas boom reduced oil prices to US$65/barrel and lower. It has built a financial model where the mid-$40 breakeven price includes the dividend amount, allowing it to comfortably sustain dividends even when the oil price falls to US$50 WTI. Its dividend policy states that 100% of free cash flow will be allocated towards shareholder returns if net debt is $13 billion or lower. It has been buying new reserves in 2024 and 2025 and using the incremental sales to repay debt. At the end of the first quarter of 2026, it had debt of $17.4 billion and is looking to pay down debt further.
Canadian Natural Resources benefited from higher volumes in the first quarter, driving its adjusted funds from operations up 17% sequentially. It will benefit from a higher oil price in the second quarter, which could keep cash flow high. Such supply shocks helped it absorb the entry of Venezuelan oil into global markets.
The company’s fundamentals show strength to withstand oil price volatility and pay dividends. In 2026, dividend growth of 6.4% was the lowest in 10 years. Once the debt falls below the $13 billion threshold, it will have room to accelerate dividend growth as well.
Is there more downside to this Canadian stock?
Before the pandemic, energy stocks were range-bound. However, the Russia-Ukraine war and the 2025 tariffs changed the supply dynamics, encouraging North American oil and gas companies to explore new markets for their oil. The U.S.-Iran war has encouraged global oil consumers to diversify their supplies. Canada is using this opportunity to increase its oil supply to Asian and European markets.
In the short term, oil price volatility will affect the Canadian Natural Resources stock price. So far, it has dipped 16% and could dip further 10-15% if oil demand doesn’t pick up. However, investors should start buying CNQ stock throughout the dip and reduce the average cost per share. The uncertainty increases the market timing risk.
Why is CNQ a buy-and-hold forever?
The Canadian government’s push for energy infrastructure in 2025 will see several strategic infrastructure projects, from pipelines to liquefied natural gas (LNG) terminals, come online by 2030. These investments will make Alberta oil and gas accessible to the world.
At the start of the article, I said that Canada has the infrastructure advantage over Venezuela. And the government is pushing this advantage further. Hence, CNQ’s share price is in a long-term uptrend, with every new peak higher than the previous: $42 in 2022, $54 in 2024, and $70 in 2026. A 150% rally in five years speaks to the company’s market expansion and export opportunities.This growth may likely continue till 2030 as demand from new markets unfolds. However, the reason to buy and hold remains dividend growth, as share price growth may stall after a while.
