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

Canada’s basketball community mourns Kobe Bryant after helicopter crash

In his 40 years in basketball, nothing Chuck Swirksy has seen compared… Continue reading

Canadian officials say more coronavirus cases expected but risk ‘remains low’

The first Canadian patient diagnosed with coronavirus began showing signs of illness… Continue reading

Quebec police divers find final sunk snowmobile amid search for missing tourists

ST-HENRI-DE-TAILLON, Que. — Divers with Quebec’s provincial police say they have located… Continue reading

Personal spending a party matter, Conservative Leader Andrew Scheer says

OTTAWA — Conservative Leader Andrew Scheer declined Saturday to shed any light… Continue reading

Human remains found in burned Alberta hotel after ice thaws enough to permit search

WETASKIWIN, Alta. — Police in Alberta say that after a week of… Continue reading

Country music fans enjoy free concert at Red Deer mall, ahead of ACMA awards

Fans like to get up close and personal and that’s exactly what… Continue reading

Your community calendar

Feb. 1 A Jump Rope Competition will be held at the Abbey… Continue reading

Bryant’s 13-year-old daughter killed in crash

A source familiar with the helicopter crash that killed Kobe Bryant says… Continue reading

Ex-NBA star Kobe Bryant dies in helicopter crash

LOS ANGELES — Kobe Bryant, the 18-time NBA All-Star who won five… Continue reading

Canucks, Oilers, Flames primed for mad dash in congested Pacific Division

Matthew Tkachuk doesn’t need to be reminded of the Pacific Division’s razor-thin… Continue reading

Canada’s Drury wins silver and Thompson takes bronze at ski-cross World Cup

IDRE FJALL, Sweden — Toronto’s Kevin Drury won silver in the men’s… Continue reading

Officials track passengers on flight with coronavirus patient

Public health officials were working Sunday to track down some of the… Continue reading

Get coronavirus information from credible sources: public health officials

TORONTO — Even before Canada’s first coronavirus case was announced in Toronto… Continue reading

Deputy prime minister asks Opposition not to delay new NAFTA

OTTAWA — Deputy Prime Minister Chrystia Freeland is asking the Opposition parties… Continue reading

Most Read