Goldman energy analysts, led by Adam Wijaya, are closely tracking wildfires in Alberta, where over half a million barrels per day of crude production are at risk.
"Good morning and happy Friday! Coming in this morning to see Brent at $64/b and WTI at $61/b… quiet on the macro front this morning for the most part, with most of the focus on (a) monitoring progression of Alberta Wildfires (number is now above 50… 28 considered out of control from 24 prior, with 19 under control)," Wijaya told clients.
The latest data from Bloomberg shows that 29 out-of-control fires are raging 12 miles from massive oil sands well sites that produce 459,000 barrels of oil daily.
The fires are now spreading dangerously close to major oil sands operations:
- MEG Energy's Christina Lake site (93,000 bpd) is just 4 km from the flames; production continues, but non-essential staff have been evacuated.
- Canadian Natural Resources' Jackfish site, with 38,000 bpd within 3 km and 83,000 bpd within 10 km of fire zones, is also at risk.
Important context: Canada is the largest foreign oil supplier to the U.S., accounting for approximately 60% of total crude imports, with the vast majority of that coming from Alberta's oil sands.
According to a person familiar with prices, Canadian heavy crude's discount to WTI has narrowed to $8.70/bbl, reflecting supply concerns. The discount on Thursday was $9.70/bbl.
Fire danger remains extreme in most of Alberta but may ease in the next few days with expected cooler weather and rain. Meanwhile, high winds in Saskatchewan and Manitoba are expected to worsen fire conditions.
Smoke is drifting into the U.S. Upper Midwest...
Lots of smoke on satellite this evening in Canada as dozens of wildfires burn out of control, particularly in Alberta where pyrocumulus clouds can be seen. Around 17,000 people are under evacuations in Manitoba and a 30 day provincial emergency has been declared in Saskatchewan. pic.twitter.com/YGAPCkKUS4
— Collin Gross (@CollinGrossWx) May 30, 2025
Any severe disruption in Alberta's oil production will tighten North American supply, raise prices, and could force U.S. refiners to source costlier supplies elsewhere. Something to certaintly keep an eye on, as per what Goldman's Wijaya noted, mainly because the summer driving season has kicked off.
