[[{“value”:”
- Oil Price Crash Is Already Hitting Alberta’s Production Last week, the tariffs announced by the Trump Administration and the decision by OPEC+ producers to add in May more barrels to the market than expected crushed oil prices.
- Alberta may see a larger-than-planned budget deficit.
- Precision Drilling CEO Neveu: oil prices so low are already impacting production.
The oil industry in Alberta is bracing for difficult times ahead, with WTI prices crashing to $60 per barrel and uncertainties about oil demand growing in a world of trade and tariff wars.
Last week, the tariffs announced by the Trump Administration and the decision by OPEC+ producers to add in May more barrels to the market than expected crushed oil prices, with WTI Crude, the U.S. benchmark, crashing to $60 per barrel—the lowest level in four years.
The benchmark U.S. oil price, against which Alberta’s producers plan and budget their activity, dropped by around $10 a barrel in just a few days, and fears are that prices could slide further into the mid $50s per barrel if trade war-fueled recessions crush oil demand.
Even the $60 per barrel WTI price is already painful for Alberta and its oil producers and oilfield service providers.
The province may see a larger-than-planned budget deficit. At the end of February, Alberta guided for a budget deficit in 2025 based on an assumption that WTI Crude oil prices would average $68 per barrel this year.
In the 2025 budget, the province’s economists said that “Stormy skies are on the horizon for Alberta’s economy after ending last year on a solid footing.”
The storm has already hit global markets and oil prices, dragging the WTI price $8 a barrel lower than the 2025-2026 forecast of the Alberta government.
Canada was spared any new tariffs in last week’s announcement of tariffs on nearly all other countries and penguin-inhabited territories. But Alberta and its oil producers and drillers must now brace for the economic fallout from the trade wars.
“The short-term pain and unpredictability right now is hard to stomach,” Kevin Neveu, president and CEO at Precision Drilling, told CTV News.
Oil prices so low are already impacting production, the executive said.
“We’ll end up having rig workers without jobs for weeks or months,” Neveu added.
Alberta’s Finance Minister Nate Horner sought to reassure the energy industry and investors that the province’s budget oil price of $68 per barrel is for the average of 2025, not a particular moment in time.
“We are monitoring the situation and expect that oil prices will eventually stabilize,” Horner said in a statement carried by CTV News.
Alberta’s oil patch is currently in a wait-and-see mode, but it could cut some capital expenditure if these lower oil prices persist, according to Mark Parsons, chief economist at ATB Financial.
“It’s still early, but it’s something you’re watching closely,” Parsons told The Canadian Press.
“If these low prices persist, you might be shaving something off your capital expenditure guidance for the year.”
If demand is hit in a U.S. recession and overall global economic slowdown, it wouldn’t matter that Canada’s energy is spared from U.S. tariffs, as oil prices would fall even further, analysts say.
Large investment banks are raising the odds of a recession. Goldman Sachs has just raised these odds to 45% over the next 12 months, up from a 35% chance estimated previously. Goldman’s analysts and economists cited “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.”
In the wake of last week’s tariff announcement, JP Morgan raised its recession odds to 60% in a research note titled “There Will Be Blood.”
Commenting on the tariff announcement from April 2, Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in a weekly report on Friday,
“What Trump delivered on this so-called “Liberation Day” was an economic war declaration likely to cause chaos across global supply chains, while in the short term raising the risk of an economic fallout, hurting demand for key commodities, with energy and industrial metals being the sectors most at risk.”
By Tsvetana Paraskova for Oilprice.com
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