Oil prices neared the $62 mark on January 8, the highest such level since May 2015, as concerns over political friction in Iran and other oil exporters was offset by higher production projected in the U.S.
Iranian President Hassan Rouhani conceded that protestors have legitimate grievances as his government continued its work to alleviate internal tensions. The government moved to block a number of social media websites, including Instagram and the messaging app Telegram. Since its crackdown, the protests have abated.
Meanwhile, U.S. production is expected to exceed 10 million barrels per day in the near future, putting it behind only Saudia Arabia and Russia as a global producer. The Organization of Petroleum Exporting Countries (OPEC) arrived as its decision to continue its production cut to the end of 2018 with increased U.S. production in mind. The rising output will likely put a cap on oil’s rise in 2018, but investors should not shy away from Canadian energy stocks in this time period.
Suncor Energy Inc. (TSX:SU)(NYSE:SU) has climbed 5.8% month over month as of early afternoon trading on January 8. The company last announced a quarterly dividend of $0.32 per share representing a 2.7% dividend yield.
Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) stock is already up 7.2% in 2018. The stock last offered a quarterly dividend of $0.05 per share with a 1.6% dividend yield.
Even with U.S. production eating into oil’s surge, rising geopolitical risk in 2018 combined with the OPEC production cut could see prices continue to churn upward.