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The Canadian energy sector is reeling after the shutting in of at least 145,000 of oil equivalent per day (boepd) in the oil-rich province of Alberta due to wildfires.
The unprecedented fires have forced tens of thousands of Albertans to evacuate their homes.
More than half a dozen Canadian oil and gas companies including Paramount Resources (OTCPK:PRMRF), Crescent Point Energy Corp. (NYSE:CPG), Vermilion Energy Inc. (NYSE:VET), Pipestone Energy Corp. (OTCPK:BKBEF), Kiwetinohk Energy Corp. (TSX:KEC:CA),Tourmaline Oil Corp. (OTCPK:TRMLF) and Cenovus Energy Inc. (NYSE:CVE) have been impacted by the nearly 80 fires currently running amok in the province.
Declaring a state of emergency on Saturday, Alberta Premier Danielle Smith described the situation as "unprecedented".
Alberta "has been experiencing a hot, dry spring and with so much kindling, all it takes is a few sparks to ignite some truly frightening wildfires," Smith said.
Climate change is making it costlier for oil and gas companies to operate. Alberta’s wildfires are the latest in a series of climate-related?supply threats have already begun to manifest in the oil and gas industry, with more than 600 billion barrels equivalent of the world’s commercially recoverable oil and gas reserves, or 40% of total reserves, facing high or extreme risks.
According to UK-based global risk and strategic consulting firm Verisk Maplecroft, the risk of?climate-related events disrupting?the flow?of oil?to global markets?is highest in Saudi Arabia, Iraq and Nigeria.
The outage comes as OPEC+ production cuts of 1.6 million bpd came into effect this month.
While easing fears of recession are believed to be largely responsible for Monday’s uptick in oil prices after three straight weeks of decline, Alberta’s outage could also help drive prices somewhat.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com