Outlook for Suncor Energy Stock in 2025

The integrated oil giant Suncor (TSX:SU) is making headlines for stating it’s reasonably sheltered against the tariffs. The company’s chief executive officer has cited multiple reasons, including its massive refining capacity within the U.S. and export capabilities (crude) directly from the port. The company is also citing energy interdependence as a reason it’s relatively safe, though this applies to a broad range of energy companies in Canada.

That said, the tariffs can be a significant threat. Even if they don’t directly (or not too harshly) affect Suncor’s financials, they can lead to negative market sentiment. A general lack of confidence in energy stocks can also negatively impact the company’s performance.

Current financials and dividends

The company recently announced its fourth-quarter results, and even though the company experienced a rise in upstream production, the year-over-year net earnings fell significantly from $2.82 billion in the fourth quarter (Q4) of 2023 to $818 million in Q4 of last year. Adjusted operating earnings saw a relatively milder decline — about one cent per share. The cash flow provided by operating activities grew from $4.3 billion to $5 billion.

The dividends are still financially viable and safe, which many investors naturally fear since Suncor broke its dividend growth streak during the pandemic. However, the company did an amazing job of reviving its payouts, and they are currently significantly higher than the pre-crash levels.

The yield is decent enough at 4%, which is the result of a bull run the stock experienced in the last few years. It gained almost 30% in the last 12 months alone though its current performance is heavily mimicking the index.

Outlook in 2025

The stock looks fundamentally solid right now, even with the threat of tariffs looming over its head. It is attractively valued, with a price-to-earnings ratio of just nine, and has been modestly bullish since the beginning of February. The resurgence of oil prices may give the stock an upward push, but the longevity of that positive external catalyst is in question.

The current position of the U.S. Energy Information Administration is that the oil prices are going to remain around US$74 per barrel (Brent crude) this year and fall down to US $66 in 2026. The 2025 projection is already modestly discounted, which doesn’t bode well for Suncor and other producers.

However, there are other forces at play as well. OPEC Plus is pushing against U.S. sanctions and is expected to gradually raise production. U.S. sanctions and tariffs might turn some buyers away, damaging North American exports. Suncor is heavily relying on its downstream business and refining (primarily local), so it might be sheltered in output and consumption but not in margin if the price of the Brent crude falls. This may cause the stock to slump, especially if the energy sector becomes more distressed than it currently is.

Foolish takeaway

Suncor’s outlook is not as bad as many upstream and even some midstream companies in the country. It’s well-positioned to weather the storm of tariffs, but if the condition is exacerbated by an OPEC and North American tug-of-war on oil prices and production, Suncor may become the casualty of a distressed energy sector. And that’s when we don’t take into account an accelerated electric vehicle shift, which can negatively impact its downstream business.