Low prices are hurting the oil sector, but Canada has a few advantages

Paula Duhatschek · CBC News

· Posted: Nov 07, 2025 4:00 AM EST | Last Updated: November 7

Persistently debased lipid prices are putting a spotlight connected spending cuts and layoffs successful the Canadian oilpatch, arsenic companies merchandise details of their latest fiscal performance.

The North American benchmark terms for a tube of crude has fallen from astir $70 US per tube astatine the outset of the twelvemonth to little than $60 US this week. 

Persistently debased prices person mostly been driven by a determination from the Organization of Petroleum Exporting Countries (OPEC) and its allies to commencement releasing much oil, driving up the planetary proviso and reversing accumulation cuts that had helped assistance prices.

Crude lipid is Canada’s largest export and immoderate deed to the terms means little gross for the economy, particularly for Alberta.

But Canadian companies are buoyed by definite advantages, particularly compared to their U.S. counterparts, analysts say. 

Surviving by adapting

In the past decade, galore companies present person gone retired of concern oregon been scooped up by larger players — leaving a fistful of bigger companies that are some little susceptible to marketplace fluctuations and are narrowly focused connected keeping costs debased portion returning wealth to shareholders.

“The companies that person survived present are the companies that person been capable to adapt,” said Patrick O’Rourke, the Calgary-based managing manager of organization equity probe astatine ATB Capital Markets.

“It’s efficaciously Darwinism, successful a sense.”

Still, companies connected some sides of the borderline person made cuts. 

Earlier this fall, Calgary-based Imperial Oil announced it planned to destruct astir 20 per cent of its workforce, oregon astir 900 jobs, successful the coming years. Likewise, U.S.-based ConocoPhillips said it would chopped immoderate of its Canadian employees opening successful November.

The layoffs travel arsenic companies effort to enactment up their equilibrium sheets successful the lawsuit of a greater terms "collapse,” said lipid marketplace expert Rory Johnston. 

“They privation to marque definite that they are arsenic prepared arsenic possible,” said Johnston, writer of the Commodity Context newsletter. 

A pump jack operates astatine sunset successful the Permian Basin adjacent Loving, N.M., connected Tuesday, May 20, 2025. The Permian Basin is simply a large oil-producing portion successful the U.S. but is lately producing much h2o and earthy state and little oil. (Susan Montoya Bryan/The Associated Press)

Companies similar Calgary-based Whitecap Resources are tightening their budgets oregon keeping them flat. While those that person taken the antithetic measurement of raising their spending plans amid the little terms environment, similar the U.S.-based Matador Resources, person seen their banal prices fall, says O’Rourke.

He expects that means much penny-pinching to come.

“It's a spot of a copycat industry,” said O’Rourke, noting that "shareholders are rewarding blimpish superior plans and superior discipline.”

Advantages of the oilpatch

Dane Gregoris, an expert with Calgary-based vigor probe steadfast Enverus, says the Canadian oilpatch has different advantages that assistance support accumulation precocious contempt little prices. It is inactive reliably productive and, successful the agelong run, cheaper to exploit.

U.S. companies operating successful the Permian Basin, which straddles westbound Texas and New Mexico, person been plagued by problems. That's because, contempt being the country's astir prolific oil-producing area, according to the U.S. Energy Information Administration (EIA), it has lately been producing much h2o and earthy state and little oil. 

A ConocoPhillips drilling tract connected Alaska's North Slope, successful February 2016. The U.S. institution is owed to chopped immoderate Canadian jobs this month. (Mark Thiessen/The Associated Press)

With prices low, U.S. companies are reluctant to walk wealth to drill caller wells that won't make arsenic overmuch oil, starring the CEO of the starring Texas shaper Diamondback Energy to suggest earlier this twelvemonth that accumulation successful that state has deed a “tipping point” and that accumulation volition commencement to decline. 

In comparison, Canada is much dominated by the oilsands, which necessitate mines and factories. And though superior costs for those are precocious upfront, erstwhile spent, companies tin support accumulation chugging on — and adjacent rise it by uncovering efficiencies present and determination — without spending a batch of money. 

Even the accepted lipid assemblage successful this state is amended positioned versus that of the U.S., due to the fact that it’s not encumbered by the problems with the Permian Basin, says Gregoris.

“There is immoderate optimism from Wall Street's perspective, and Bay Street, that these Canadian lipid companies are good positioned for the semipermanent fixed their extent of resource," helium said.

The completion of the Trans Mountain Pipeline expansion, which carries lipid from Alberta to the B.C. coast, has besides helped Canadian producers by opening entree to caller export markets successful Asia. 

Access to those markets has, successful caller months, helped to somewhat offset the sting of wide little commodity prices, says O'Rourke, with ATB.

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Despite these advantages, Gregoris says, the debased terms situation is acold from perfect and volition apt proceed for months to come. OPEC and its allies program to proceed ramping up accumulation successful December, past intermission successful the caller year.

Prices are estimated to enactment astir $62 US per tube for the remainder of the year, and could tumble down to astir $52 US successful 2026, according to the latest forecast from the EIA. 

“We benignant of expect the situation we're successful contiguous that translates into adjacent year,” helium said.