Canadian oil and gas companies expect to see robust profit growth resulting from the supply squeeze caused by the war in the Middle East, but will not use the windfall for more investments, Reuters reported, citing executives at an industry event.
“We are a commodity-based business. When we see global prices rise for energy, we participate in that,” the chief executive of oil sands major Cenovus told the publication in an interview. “But I don’t think it’s going to have any strategic or long-term impacts on anybody’s operating plans at this point,” Jon McKenzie also said.
The main concern for the industry is the uncertainty as to how long prices will remain elevated. This is why Canadian drillers will not rush to drill yet, if at all. Yet it is not the only reason: there are simply not enough pipelines to justify any meaningful increase in output, Reuters wrote, citing the chief executive of Tamarack Valley Energy, Brian Schmidt. Schmidt said that all existing pipelines are operating at maximum capacity, and if Canada is to export more crude, it would need to build more of these.
Carbon taxes are also a substantial problem for the Canadian oil industry. The taxes aim to force the industry to reduce its emissions but there are limits to this, after which the only way to reduce emissions is by capping production, which is what the industry has warned it would have to do.
Meanwhile, “The world is facing an unprecedented loss of oil supplies, and incremental liftings from elsewhere are insufficient to offset the shortfall,” Vortexa senior market analyst Xavier Thang wrote in a recent note, pointing to supply loss of some 17.7 million barrels daily compared to the 2025 average flows from the Middle East. With the U.S. blockade stopping Iranian exports as well, the amount of oil cut off from the global market comes closer to 20 million barrels.
By Irina Slav for Oilprice.com
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