At approximately 10:17 p.m. ET Wednesday, Iran launched a ballistic missile toward Kuwait. Kuwaiti forces intercepted it. Hours earlier, Iranian forces had launched five attack drones near the Strait of Hormuz; U.S. forces intercepted all five and prevented a sixth launch from a ground control site in Bandar Abbas. The IRGC followed by announcing it had struck an unnamed American airbase in retaliation for prior U.S. strikes on Iranian targets near the strait. U.S. Central Command acknowledged fresh airstrikes on Iranian drone infrastructure, framing them as defensive actions to protect troops and commercial maritime traffic.
By Thursday morning in North American trading, WTI crude futures had risen approximately 2% to $90.75 and Brent had risen to $96.28. The ceasefire -- in the technical sense of an absence of declared major combat operations -- remains nominally in effect. In the operational sense, both sides are conducting active strikes, and the Strait of Hormuz has not moved a meaningful step closer to reopening.
What the Oscillation Pattern Is Telling Canadian Investors
The past ten days have established a recognizable price pattern: diplomatic headlines -- a Trump social media post characterizing negotiations as "proceeding nicely," a Rubio statement citing "good signs" -- produce oil price declines as markets price a deal probability upward. When those headlines fail to resolve into an actual agreement and military action resumes, prices recover. WTI has oscillated between approximately $88 and $97 during this period, with the band compressing gradually as the market absorbs the reality that a deal may be weeks or months away rather than days.
The chart above shows WTI price action from May 18, when Trump first indicated he had called off imminent strikes to allow more negotiations, through Thursday morning's post-drone-intercept level, illustrating the deal-escalation oscillation cycle and its effect on the price range.
WTI crude has oscillated between approximately $88 and $101 since May 18, when Trump called off imminent Iran strikes to allow negotiations. Deal-optimism events produce price declines; escalation events produce recoveries. The range has compressed but has not resolved in either direction.
The Canadian Energy Portfolio Implication: Asymmetry, Not Trend
The specific portfolio implication for Canadian advisors is not that energy names will rise today. It is that the oscillation pattern has created a systematic asymmetry that clients with TSX energy exposure need to understand.
WTI was approximately $61 per barrel before the conflict began February 28. It has not traded below $88 since ceasefire optimism peaked in mid-May. Saudi Aramco's CEO Amin Nasser warned Monday that even if the strait reopened today, full supply normalization would take until 2027 -- because the infrastructure damage to Gulf oilfields, the disruption to tanker routing patterns, and the depletion of refined product inventories cannot be reversed overnight. The International Energy Agency noted that commercial oil inventories globally were depleting at a pace that had only a few weeks of buffer remaining at peak-conflict consumption rates.
In this context, the deal-optimism selloffs in Canadian energy names -- Suncor is up approximately 45% year to date from pre-war levels, Canadian Natural Resources up approximately 32% -- are not mean-reversion events driven by fundamental deterioration. They are probability-weighted pricing of a scenario that, even if it occurs, does not eliminate the structural oil price premium for 12 to 18 months. A client who sold Suncor on Wednesday on ceasefire headlines and sees the stock recover Thursday on IRGC-strike headlines is experiencing the mechanics of a market that has not yet priced a definitive outcome because no definitive outcome exists.
The Specific Risk for Canadian Portfolios: The Treaty Scenario
The base case remains elevated oil and elevated Canadian energy revenues through at least 2026. The tail risk worth naming for clients is a comprehensive deal -- not a ceasefire, but a full peace agreement that reopens the strait to unrestricted commercial traffic and includes lifting of the U.S. naval blockade of Iranian ports. In that scenario, WTI could retrace toward $70 to $75 within weeks, which would sharply compress the profit margins and free cash flow projections that currently support TSX energy valuations.
That tail risk is not the base case. Rubio stated this week that significant disagreements over Iran's nuclear program and frozen funds remain unresolved. Trump said at a cabinet meeting Wednesday that he is "not satisfied" with current deal terms and that the U.S. would either reach an agreement or "finish the job." The oscillation between those two outcomes is the portfolio risk -- and it is the conversation clients with concentrated energy exposure need to have before either scenario resolves.