The article discusses the potential impact of US President Donald Trump’s proposed tariffs on Canada’s energy industry. According to the article, Canada is more reliant on the US than vice versa when it comes to energy, with over 97% of Canadian crude oil exports destined for the US in 2023.
If tariffs are imposed on Canadian oil, experts say that refiners may choose to use alternative sources of heavy crude, such as Western Canadian Select (WCS), which is typically traded at a discount compared to US benchmark West Texas Intermediate. This could lead to discounts on WCS and potentially reduce demand for Canadian oil.
The article also notes that Canadian oil production has been increasing in recent years, with major companies like Suncor Energy, Cenovus, and Imperial Oil announcing plans to boost output in 2025. However, these outlooks could be disrupted if energy becomes a bargaining chip in a larger trade war.
To avoid similar situations in the future, experts recommend that Canada diversify its customer base by building new oil pipelines or finding alternative markets for Canadian crude.
The article highlights several key points:
- Canada’s reliance on the US market: Over 97% of Canadian crude oil exports were destined for the US in 2023.
- Potential impact of tariffs: Refiners may choose to use alternative sources of heavy crude, such as WCS, if tariffs are imposed on Canadian oil.
- Discount on WCS: WCS is typically traded at a discount compared to US benchmark West Texas Intermediate, which could lead to discounts on WCS and potentially reduce demand for Canadian oil.
- Increasing production: Canadian oil production has been increasing in recent years, with major companies announcing plans to boost output in 2025.
- Need for diversification: Canada needs to diversify its customer base by building new oil pipelines or finding alternative markets for Canadian crude.
Overall, the article suggests that a trade war could have significant implications for Canada’s energy industry and highlights the need for diversification to mitigate these risks.