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Alberta Wildfires Shut Down Over Half of Oil Production Amid Supply Crunch

by Krystal

Alberta is facing one of its worst early wildfire seasons in years, forcing more than 50% of the province’s oil production offline, industry officials confirmed Monday.

Seven major oil producers have scaled back or halted operations as fires spread through key infrastructure areas. Evacuations are underway in production centers like Fort McMurray, recalling the devastating 2016 wildfires that severely disrupted Canada’s oil industry.

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The Alberta government has not released official figures yet, but insiders told Bloomberg that the fires now threaten both steam-assisted gravity drainage (SAGD) facilities and pipeline routes.

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Rory Johnston, founder of Commodity Context, called the situation “an operational nightmare” and said it adds “serious bullish pressure” to markets amid tightening global crude inventories. He also warned that the market may underestimate Alberta’s vulnerability to wildfires.

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The wildfire season began in earnest last week with community evacuations. Canadian Natural Resources and Cenovus Energy have confirmed disruptions. Cenovus has temporarily shut multiple steam-driven projects and evacuated non-essential staff.

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Laura Lau, Chief Investment Officer at Brompton Funds, told BNN Bloomberg that while lessons were learned from 2016, wildfires remain unpredictable and hard to outrun when weather conditions worsen.

Firefighters continue to battle more than 100 active burn sites in Alberta, with dry weather expected to last throughout the week.These wildfire-related production cuts come as the global market faces a shortage of heavy crude. Recent seasonal maintenance at Alberta’s oil sands had already reduced output, and U.S. sanctions limit supplies from Venezuela, one of the few other heavy crude producers. This has created a tightening supply just as demand for heavy oil blends increases.

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