The Oil Market Is Still Not Pricing in the Full Effect of This Conflict
Contributed Opinion

1. Ron Struthers: I, or members of my immediate household or family, own securities of: Freehold Royalties. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: None. I determined which companies would be included in this article based on my research and understanding of the sector.
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Oil took another jump higher today despite all the rhetoric about releasing record amounts of oil reserves. The IEA is preparing its largest-ever emergency crude oil release to counter surging Brent and WTI prices. The talk is of 400 million barrels. There is between 20 and 25 million per day shut off due to the Iran war, so 400 would make up 16 to 20 days of supply cut off. The war has already been 10 days and counting.

We cannot even be sure this much oil is available to release. The U.S. claimed they will release 120 million barrels from the SPR. In recent days, the G7 has been harping about releasing reserves, and I chuckled when I heard the Canadian government say it would do its part. Canada has no oil reserves, and even if we did, there is no way to get but small quantities out.

The market seemed to take its cue from two oil tankers being attacked rather than talk of reserve releases. Two oil tankers were attacked and exploded in Iraqi waters, forcing Iraq to stop operations at its oil ports. The two foreign tankers carrying Iraqi fuel oil have been subjected to unidentified attacks within Iraqi territorial waters, causing both vessels to catch fire, according to security sources cited by Baghdad Today and confirmed by other sources.

I believe the oil market is still not pricing in the full effect of this conflict.

I have no doubt Iran wants to inflict pain through high oil prices. IRGC spokesman Ebrahim Zolfighari warned the Trump administration at the start of the week: "If they can afford the price of oil at $200 per barrel, let them keep playing this game."

I think we are looking at $100 to $150 oil for an extended time, and maybe higher, depending on how the war evolves.

We just highlighted FRU as a Buy again, and they released very good 2025 annual results yesterday, but the stock dropped on these results.

Freehold Royalties

^{Recent Price - CA$17.10}

^{Entry Price - CA$11.25}

^{Opinion - Buy}

I think the market was expecting better results from Freehold Royalties Ltd. (FRU:TSX), given the oil price and the current bullish market.

Realize that FRU's oil price was US$59.14 per barrel in Q4 and US$64.81 per barrel on average for the year.

Oil prices were their weakest in Q4, as you can see in the chart above.

2025 highlights included:

• Achieved record annual production of 16,294 boe/d, a 9% increase from 2024;
• Total annual crude oil and natural gas liquids production of 10,730 boe/d(1), a 12% increase from 2024;
• Generated total revenue of CA$313 million;
• Bonus and leasing revenue contributed CA$8 million, an increase from CA$3 million in 2024;
• Delivered CA$235 million in funds from operations (CA$1.43/share),(2)(4) a 2% increase from 2024;
• Reduced long-term debt by CA$18 million, ending 2025 at CA$283 million;
• Well productivity improvements of 35% in Canada and 10% in the U.S. compared to the average type curves in 2024
• Corporate proved and probable reserves totalled 63 MMboe, a 3% decrease from 2024, reflecting continued weakness in Canadian natural gas prices and lower Canadian drilling activity.

While the results were not gangbusters, they were really good for a very weak year in oil prices. In 2025, oil was far below 2024 prices and the weakest since the 2020 pandemic. I have no doubt that the market is looking backward instead of forward.

David Spyker, President and CEO, commented on the weak market in the latter part of 2025 (my bolding): "Activity levels, particularly in the second half of 2025, were impacted by lower commodity prices, and generally cautious capital deployment as broader macroeconomic headwinds and uncertainty in outcomes of ongoing geopolitical tensions led some operators to scale back their capital programs. In the U.S., drilling activity declined by 20% from the first to the second half of 2025, and Canadian drilling activity decreased by 25% in the fourth quarter of 2025, compared to the same periods in 2024. Accordingly, we expect production to moderate through the first half of 2026 and return to growth in the second half of the year. "

In 2025, Freehold delivered our fifth consecutive year of annual production growth at 16,294 boe/d, representing a 9% increase from 2024, led by a 33% increase in U.S. production.

FRU did well in a very weak oil market; imagine how they will do in a good oil market. I believe today's sell-off is a buying opportunity. Remember, at Playstocks, we look for long-term trends and growth, but short-term opportunities can be taken advantage of quite often.

Meanwhile, our recent defense stock already jumped 13% in just 3 days

MDA Space

^{Recent Price CA$42.15}

^{Entry Price - CA$40.45}

^{Opinion - Buy}

MDA Space Ltd.'s (MDA:TSX; MDA:NYSE) stock jumped up as high as CA$45.90 on the back of the NY IPO news and is back down today on a broad, steep market sell-off. Another chance to buy at a good price. That said, if the market continues a steep dive, there could be better buy prices ahead, near support.

Joe had this update on MDA:

MDA Space continues to strengthen its position as one of Canada's most important space and defense technology companies, with several recent developments underscoring both its strategic value and growth potential. A major step was the launch of 49North, its new defense-focused spin-off "delivering multi-domain and mission-critical capabilities". This sharpens MDA's exposure to the rapidly expanding military and sovereign space market. At the same time, the company moved to deepen its U.S. capital markets presence through a $300 million raise tied to its planned NYSE IPO, a move that should broaden investor awareness, improve liquidity, and help fund future expansion as demand for space-based infrastructure accelerates.

Operationally, MDA is also showing that it can scale. The company recently announced it has increased satellite production from roughly one satellite per week to two per day, a dramatic ramp-up that highlights both execution strength and the growing commercial opportunity in satellite manufacturing. That production momentum is being matched by new defense-related partnerships, including an MOU with Hanwha tied to a military satellite constellation opportunity.

I personally think this will be contingent on whether Canada chooses to partner with Korea for subs. Taken together, the 49North defense spinoff, NYSE-related capital raise, rising production capacity, and growing defense partnerships suggest MDA is evolving into a much larger and more strategically important player in the global space economy.