Canada's differential dilemma
Wide discounts for Canadian oil lead to unilateral production cuts
Canadian oil producers are price takers, not price makers. But what to do when your main export is selling for less than half of global prices? That was exactly the situation in November last year when the differential — or discount — for Western Canadian Select (WCS) widened to an all-time high of $46/bl to West Texas Intermediate (WTI) and prompted a crisis of confidence in the country's oil patch after nominal Canadian prices fell below $11/bl. Given that fully 99% of exports go to the US, domestic producers are effectively subsidising American refiners to the tune of $2.4/bl per month — both figuratively and literally lining the pockets of US president Donald Trump's economic resurgence.
Also in this section
10 September 2024
The third part in the second chapter of our history of oil looks at the US shale revolution and ‘declaration of cooperation’ that created OPEC+
9 September 2024
We pick up the story of the history of oil with the response of consumer countries to the 1973 embargo, with the creation of the IEA proving the adage that every action has a reaction
9 September 2024
Continuing our 90th anniversary deep dive into the history of oil, the first part of our second chapter covers the post-war world and the beginnings of OPEC
9 September 2024
While greater focus on decarbonisation is likely, economic pressures and huge debt burden could squeeze energy policy ambitions
