Middle East Tensions Push Canadian Energy ETFs Higher
Canadian energy ETFs climb as heat and hostilities collide. ETFs to watch.
Geopolitical risk returned to the energy markets last week, with Canadian energy ETFs posting solid gains amid renewed concerns over the Strait of Hormuz. Iran’s parliament approved a resolution to close the critical maritime corridor after U.S. strikes on its nuclear facilities — a move seen as symbolic, but one that injected fresh volatility into crude and natural gas markets.
Roughly 20% of the world’s oil and LNG passes through the Strait, making it a vital artery for global energy trade. A credible blockade could send prices sharply higher. However, analysts remain unconvinced Iran will act on its threats.
The political and economic costs would be steep: China remains Iran’s largest energy buyer, and any disruption would likely provoke coordinated retaliation from the U.S. and its allies.
By escalating rhetoric without cutting supply, Iran may be aiming to lift oil prices through heightened risk sentiment rather than actual disruption.
That strategy appears to be working, up to a point. Crude oil prices and energy ETFs rallied before cooling slightly, as it became more likely that oil flows would remain uninterrupted. Still, the heightened rhetoric was enough to prompt a fresh round of risk positioning across energy markets.
Natural Gas: Heatwave-Driven Demand Adds a Tailwind
Natural gas prices also rose sharply, but not solely on geopolitical concerns. Forecasts for a record-breaking summer heatwave across the U.S. Midwest and East Coast pushed up expectations for cooling-related power demand — a major seasonal driver for gas-fired electricity.
With U.S. production slightly down due to seasonal maintenance and high air-conditioning demand expected to persist, the North American gas market is tightening. That combination helped push Canadian natural gas ETFs higher, even as flows into the funds remained subdued.
Canadian Energy ETF Performance: Natural Gas Leads the Charge
Canadian-listed energy ETFs posted solid gains across the board last week, with natural gas names taking the lead. The Global X Natural Gas ETF (HUN) climbed 4.49% week-to-date, extending its year-to-date performance to an impressive +11.82%, buoyed by both geopolitical tension and growing domestic demand tied to the heatwave.
Crude oil-focused products also performed well. The Global X Crude Oil ETF (HUC) advanced 2.95% on the week and has now returned +0.96% year-to-date, while the broader Ninepoint Energy Fund (NNRG) gained 2.98%, continuing its strong momentum with +12.08% year-to-date performance.
Other diversified energy exposures also moved higher: BMO’s SPDR Energy Select Sector Index ETF (ZXLE.F) rose 1.06% last week, and RBC’s Global Energy Fund (RENG) added 1.29%, reflecting wider strength across energy equities.
Despite the price action, investor flows were mixed—suggesting cautious sentiment persists. Energy may be hot, but conviction in the rally remains lukewarm.
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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
