Disclaimer
This article is for educational and informational purposes only and is not investment advice. Mining stocks are volatile and involve significant risk of loss of capital. Readers should conduct their own due diligence and consult qualified financial, tax, and legal advisors before making any investment decisions. Past performance is not indicative of future results. All analysis is based on publicly available information and market conditions as of April 2026.
I. Introduction
Eric Nuttall, Ninepoint Energy Strategies lead and one of the most respected oil analysts globally, has described the current situation as “the worst energy crisis of our lifetimes,” driven by the effective closure of the Strait of Hormuz and massive supply destruction from the Iran conflict.
Key quotes from his recent update include:
“This is the worst energy crisis of our lifetimes.”
Nuttall emphasizes the multi-month (or longer) lag before any meaningful supply recovery, even if the strait reopens. He highlights that the political risk premium now strongly favours safe, stable jurisdictions for energy and resource production.
The core thesis is clear: sustained high oil and diesel prices will directly and significantly increase All-In Sustaining Costs (AISC) for miners globally, compressing margins and creating a clear bifurcation between low-cost, low-fuel-intensity operators and high-cost, diesel-heavy projects.
This article provides a clear breakdown of Nuttall’s outlook, the direct link to mining AISC, and which major miners worldwide are most exposed or best positioned in 2026.
II. Eric Nuttall’s Core Thesis – The Structural Energy Shock
Nuttall’s analysis focuses on the structural nature of the supply shock. The effective loss of ~14–15 million barrels per day (mbd) of supply from the Strait of Hormuz is far beyond a temporary event.
Even with a ceasefire, tanker rerouting, port congestion, insurance costs, and infrastructure damage (including at Qatar’s Ras Laffan and Iran’s South Pars) mean shortages will persist for months. Nuttall sees structurally higher oil prices persisting into 2027–2028 as the market balances through price rather than immediate supply recovery.
He notes that higher prices will eventually curb demand through destruction, but the transition period will be painful for energy-intensive industries like mining. The political risk premium now strongly favours safe jurisdictions such as Canada, Australia, and the U.S.
III. Oil Price Scenarios for the Rest of 2026 and Their Impact on Diesel
Base case (most likely): Oil remains in the $100–$130/bbl range through Q2–Q3 2026 as inventories hit the operational minimum and partial reopening lags. Diesel prices in Canada and globally stay elevated ($2.50–$2.80/L in many regions).
Escalation case: Renewed conflict or Hormuz disruption pushes oil above $150/bbl → diesel spikes further, adding $15–$30+/oz to gold AISC and proportionally more for copper and lithium operations.
De-escalation case: Quick, credible reopening of the strait leads to oil dropping to $80–$95/bbl → modest diesel relief, but still higher than pre-war levels due to the industrial carbon tax and logistics costs.
Canadian diesel reality: Retail and industrial diesel prices are already at record levels in parts of British Columbia and northern regions. Any sustained oil above $100/bbl keeps them elevated, directly impacting mine-site operations.
IV. How Higher Oil Prices Directly Impact Mining AISC
Diesel is a primary cost for open-pit operations. Haul trucks, drills, generators, and site power in remote Canadian and global operations are heavily diesel-dependent.
Quantified sensitivity: A sustained $20–$30/bbl increase in oil can add $8–$20+/oz to gold AISC and significantly more for copper, lithium, and iron ore operations. Secondary effects include higher costs for explosives, tires, aluminum, plastics, and transportation of concentrates and supplies.
Global variation: Remote or diesel-dependent mines in Africa, South America, and parts of Australia face the greatest pressure. Underground or high-grade operations are more resilient.
The cumulative result is reduced free cash flow, delayed exploration and development spending, and lower project economics for marginal operations.
V. Global Mining Companies Most Affected by Higher AISC
Gold Sector
High exposure: Open-pit heavy producers in remote regions (certain Australian, African, and South American operations).
More resilient: Underground or high-grade producers with hedging programs (e.g., Agnico Eagle, Newmont, Barrick in stable jurisdictions).
Copper Sector
High exposure: Large open-pit operations in Chile, Peru, and the DRC (e.g., First Quantum, Freeport-McMoRan, BHP, Rio Tinto).
More resilient: Underground or low-diesel intensity projects in stable jurisdictions.
Iron Ore & Bulk Commodities
High exposure: Australian Pilbara producers (BHP, Rio Tinto, Fortescue) with massive haul fleets.
Battery Metals (Lithium, Nickel, Cobalt)
High exposure: Remote open-pit operations in Australia, Africa, and South America face significant cost pressure.
VI. Winners in a High-Oil-Price Environment
Low-AISC, underground, or high-grade operations in Tier-1 jurisdictions are best positioned.
Royalty and streaming companies (Franco-Nevada, Wheaton, Osisko) — zero direct diesel risk and leveraged to higher gold prices.
Uranium producers and developers in stable jurisdictions (Cameco, NexGen, Denison) — benefit from the strengthened energy-security narrative.
Companies actively investing in electrification, renewables, or hydrogen at mine sites to reduce diesel dependence.
VII. Investor Implications and Positioning Strategy
Tactical: Use any short-term gold price dips on ceasefire optimism to add to low-cost, hedged producers.
Strategic tilt: Overweight royalty/streaming companies, underground/high-grade gold producers, and uranium assets in stable jurisdictions.
Risk management: Focus on balance-sheet strength, hedging programs, and electrification initiatives.
Canadian advantage: Tier-1 assets in Canada gain relative attractiveness as investors seek secure supply amid global disruption.
VIII. Conclusion
Eric Nuttall’s warning of the “worst energy crisis of our lifetimes” underscores that higher oil and diesel prices are likely to persist for months, directly driving mining AISC higher worldwide.
This environment creates a clear bifurcation: high-cost, diesel-heavy operations face margin pressure, while low-cost, low-fuel-intensity producers in stable jurisdictions stand to benefit.
In 2026, the winners in global mining will be those best positioned to withstand sustained energy cost inflation — quality gold, royalty, and uranium names in Tier-1 jurisdictions are the clearest beneficiaries.
Thewealthyminer.com elite investment club provides members with exclusive insights and disciplined frameworks to evaluate resource opportunities in the current higher-cost energy environment.
Disclaimer
This article is for educational and informational purposes only and is not investment advice. Mining stocks are volatile and involve significant risk of loss of capital. All analysis is based on publicly available information and market conditions as of April 2026. Readers should conduct their own due diligence and consult qualified advisors.
Author
Ben McGregor authors the Weekly Roundup at CanadianMiningReport.com, providing sharp analysis of the metals and mining sector. With a talent for spotting trends, Ben distills complex market shifts into clear, engaging insights on TSXV junior miners. His weekly updates cover gold, copper, uranium, and more, blending data-driven perspectives with a knack for identifying opportunities. A vital resource for investors, Ben’s work navigates the dynamic junior mining landscape with precision.