The oil industry in Alberta is preparing for challenging times as West Texas Intermediate (WTI) crude prices fall to $60 per barrel. This decline comes amid growing concerns over oil demand, as trade wars and tariff disputes shake the global economy.
Last week, the Trump Administration’s new tariffs and OPEC+’s decision to increase oil production in May led to a sharp drop in oil prices. WTI crude, the U.S. benchmark, plummeted to $60 per barrel—its lowest level in four years.
The price drop of around $10 per barrel in just a few days has raised fears that WTI could slide further, potentially reaching the mid-$50s per barrel if the trade wars spark recessions that reduce oil demand.
Even at $60 per barrel, Alberta’s oil producers and service providers are already feeling the strain. The province could face a larger-than-expected budget deficit. In February, Alberta’s budget forecasted a deficit in 2025, assuming WTI prices would average $68 per barrel this year.
In the 2025 budget, Alberta’s economists warned of “stormy skies” ahead for the province’s economy, despite a solid finish to the previous year. The global market downturn and the oil price crash have already pushed the WTI price $8 below the government’s 2025-2026 forecast.
While Canada avoided new tariffs in last week’s trade announcement, Alberta’s oil producers still face economic challenges from the ongoing trade wars.
Kevin Neveu, president and CEO of Precision Drilling, expressed concern about the unpredictability of the current situation. “The short-term pain and unpredictability right now is hard to stomach,” Neveu told CTV News. “Oil prices so low are already impacting production, and we’ll end up having rig workers without jobs for weeks or months.”
Alberta’s Finance Minister, Nate Horner, reassured the energy sector, emphasizing that the province’s budget oil price of $68 per barrel was based on an average for 2025, not a short-term prediction. “We are monitoring the situation and expect that oil prices will eventually stabilize,” Horner said.
The province’s oil sector is in a wait-and-see mode but could reduce capital spending if low oil prices continue. Mark Parsons, chief economist at ATB Financial, stated, “If these low prices persist, you might be shaving something off your capital expenditure guidance for the year.”
Analysts also warn that if oil demand drops due to a U.S. recession or a global economic slowdown, oil prices could fall further, even with Canada’s energy sector excluded from new U.S. tariffs.
Investment banks are increasing the likelihood of a recession. Goldman Sachs has raised its recession odds to 45% over the next 12 months, up from the previous 35%. Goldman cited tightening financial conditions, foreign consumer boycotts, and rising policy uncertainty as factors that could depress capital spending.
Following the tariff announcement on April 2, JP Morgan raised its recession odds to 60%. Ole Hansen, Head of Commodity Strategy at Saxo Bank, warned that the tariffs could trigger disruptions in global supply chains and hurt demand for key commodities, particularly energy and industrial metals.
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