Canadian oil stocks rise as U.S. air strike stokes fears of market disruption

Canadian oil stocks rise as U.S. air strike stokes fears of market disruption

CALGARY — Higher oil prices in the wake of a U.S. air strike in Iraq that killed a top Iranian general drove up share prices for Canadian energy companies Friday and threatened higher fuel prices ahead for consumers.

The Toronto Stock Exchange energy index was up by as much as three per cent in early trading and closed the day ahead by 0.8 per cent.

Meanwhile, the March contract for London-traded Brent crude peaked at US$69.48 per barrel in intraday trading before settling at US$68.59, up US$2.34 or 3.5 per cent.

Several Calgary-based oil firms posted gains on Friday, including MEG Energy Corp., up 4.2 per cent, Canadian Natural Resources Ltd. (0.8 per cent), ARC Resources Ltd. (2.9 per cent), Vermilion Energy Inc. (1.5 per cent) and Tourmaline Oil Corp. (1.9 per cent).

The U.S. attack and Iranian threats of reprisals serve as a reminder that there is a geopolitical risk to oil from the Middle East, financial analysts said.

The events aren’t likely to immediately boost gasoline pump prices for Canadian consumers, but that could happen if tensions remain heightened for an extended period.

“You can’t sit on the sidelines and think that the risk is not really there,” said Phil Skolnick, an analyst with Eight Capital.

“It really is there and now we’ve seen that and that’s why the equities across the board in the energy space are reacting positively … Now the question is: What’s Iran’s next move?”

Any disruption in heavy oil shipments from the Middle East to the U.S. Gulf Coast could increase demand for Canadian heavy oil and support prices, Skolnick said.

Exports from Canada have been constrained by a lack of pipeline space but increased demand could be met by growing crude-by-rail capacity, he said, adding recent wider-than-usual Canada-U.S. oil price differences make that option attractive in terms of profitability for producers.

A drone attack on Saudi Arabian oil facilities in September had a similar short-term affect on the Canadian energy sector and oil prices, but a faster-than-expected recovery meant impacts on consumers and energy companies were minimal.

“We saw US$80 (for Brent crude oil) last time with a relatively brief outage,” said Randy Ollenberger, managing director of oil and gas equity research at BMO Capital Markets.

“If Iran made a more concerted action to disrupt global production, you’d be looking at prices higher than that, in which case you’d certainly see an even bigger move in Canadian equities.”

Short-term effects in Canada will likely be muted, said CEO Allan Fogwill of the Canadian Energy Research Institute, noting that other OPEC countries and Russia have surplus capacity they can bring on if there are disruptions.

“If the fundamentals change and there’s some kind of escalation of the conflict, that’s a different story,” he added.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Eva Pennock got an unlikely visit from a horse at a Three Hills Health Care Centre. (Photo courtesy of Jamie Pennock)
Unlikely visitor brings cheer to residents at Three Hills Health Care Centre

An unlikely visitor spread some cheer and good tidings this week at… Continue reading

(File photo by Advocate staff)
Zero tax increase approved by Red Deer city council for 2021 and 2022

City council passed operating budgets for the next two years on Thursday

Red Deer city council approved a $39.6 million police budget for 2021, up for inflationary reasons from $37.9 million in 2020. (Black Press file photo).
Red Deer city council retains police funding, while also launching a crisis team

De-funding police is not a conversation in this municipality

Alberta reported an additional 1,854 cases of COVID-19 Thursday. (THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories)
Red Deer has 289 active cases of COVID-19

Province now has 17,743 active cases

The Cambridge Hotel and Conference Centre in Red Deer has new owners. (Photo by Sean McIntosh/Advocate staff)
Cambridge Hotel in Red Deer has new ownership group

‘They’re making an investment in this iconic hotel for the future,’ says general manager Gil Vallee

Dan Cochrane, senior pastor at CrossRoads Church. Contributed photo
CrossRoads Church closes its doors for two weeks after staff member tests positive for COVID-19

CrossRoads Church made the decision to cancel in-house services for two weeks… Continue reading

FILE - In this Oct. 23, 2013, file photo of A.P. Moller-Maersk’s oil rig in the North Sea named Halfdan. Denmark has decided to end to all oil and gas offshore activities in the North Sea by 2050 and has cancelled its latest licensing round, saying the country is “now putting an end to the fossil era.” The Danish Parliament voted late Thursday to end the offshore gas and oil extraction that started in 1972 and has made it the largest producer in the European Union. (Claus Bonnerup/Polfoto via AP,file)
Denmark to end oil, gas extraction in North Sea

COPENHAGEN — Denmark has decided to end all oil and gas activities… Continue reading

An employee works in a warehouse with dry ice outside at the Pfizer Manufacturing plant in Puurs, Belgium, on Friday, Dec. 4, 2020. British officials on Wednesday authorized a COVID-19 vaccine for emergency use, greenlighting the world’s first shot against the virus that’s backed by rigorous science and taking a major step toward eventually ending the pandemic. (AP Photo/Olivier Matthys)
UK defends vaccine decision amid criticism it moved too fast

LONDON — U.K. regulators went on the offensive Friday to beat back… Continue reading

A masked worker walks behind a hiring sign on his way into the Dover Cliffs long term care home in Port Dover, Ont., Friday, Nov. 13, 2020. Statistics Canada will say this morning how Canada's job market fared last month as COVID-19 case counts rose along with a new round of public health restrictions. THE CANADIAN PRESS/Frank Gunn
Canadian economy added 62,000 jobs in November, Statistics Canada says

OTTAWA — Statistics Canada says the economy added 62,000 jobs in November… Continue reading

A mother and her son, shown in this undated handout image provided by Kristy Wolfe Photography, communicate using a PECS binder about what is happening next in their day. A new report from British Columbia’s representative for children and youth says the COVID-19 pandemic has exacerbated long-standing problems with the province’s support systems for those with so-called special needs, leaving families feeling abandoned. THE CANADIAN PRESS/HO-Kristy Wolfe Photography *MANDATORY CREDIT*
Children and youth with special needs ‘left out’ of pandemic response: B.C. watchdog

VANCOUVER — Victoria O’Connor says she’s reached a breaking point while constantly… Continue reading

European Commission’s Head of Task Force for Relations with the United Kingdom Michel Barnier, left, arrives at the Conference Centre in London, Friday, Dec. 4, 2020. With less than one month to go before the U.K. exits the EU’s economic orbit, talks are continuing, and U.K. officials have said this is the last week to strike a deal. (AP Photo/Kirsty Wigglesworth)
UK says EU trade talks at tricky point as hopes of deal dim

LONDON — Britain’s business minister said Friday that U.K.-EU trade talks are… Continue reading

Russell Knox takes 1st-round lead in Mayakoba Golf Classic

Russell Knox takes 1st-round lead in Mayakoba Golf Classic

Charley Hull takes LPGA Tour lead in chilly North Texas

Charley Hull takes LPGA Tour lead in chilly North Texas

Most Read