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Business Environment Profiles - Canada

Price of Canadian oil

Published: 29 April 2025

Key Metrics

Price of Canadian oil

Total (2025)

69 $

Annualized Growth 2020-25

14.0 %

Definition of Price of Canadian oil

The price of Canadian oil represents the price of Western Canadian Select (WCS), the price obtained by most Alberta producers of oil. Annual figures are presented as the equally weighted average of monthly averages. Figures are derived from published Economic Dashboard of Alberta and Bank of Canada data.

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Recent Trends – Price of Canadian oil

According to Alberta Energy, WCS represents a stream of conventional heavy (high viscosity) oil mixed with some blends of bitumen and diluents. Lighter oils, such as Brent and West Texas Intermediate (WTI), represent the starting point for the pricing of WCS. WCS trades at a discount to these lighter oils as they are more accessible and less expensive to process in refineries. Regardless, movements in global oil prices and WCS are highly correlated. However, 2018 represented an anomaly in this relationship. A surge in oil production and a subsequent pipeline bottleneck, which increased transportation costs, led to more oil being transported by rail and truck. Increased transportation costs typically widen the price differential between WCS and WTI if the existing pipeline is at capacity. This prompted Alberta's government to reduce oil production to raise the price of WCS oil.

The pandemic drastically affected global oil prices as people traveled less and started to work from home. This led to a steep decline in global oil prices as demand fell sharply, while oil supply could not adjust as quickly. Tensions also arose regarding oil production between Russia and Saudi Arabia, which further saw global oil prices fall, affecting WCS prices. Both countries shortly agreed to production cuts in the following months. This partially helped jumpstart recovery in the price of Canadian oil. In addition, as economies around the world partially reopened in the second half of 2020, oil prices started to recover sharply.

In 2021, with vaccines widely distributed across the globe, demand for oil picked up, rising due to more sectors of the economy being able to return to normal as consumers return to regular travel habits again. With Canada exporting over 80.0% of the crude oil it harnesses as of 2020, according to the Canada Energy Regulatory or the CER, downstream demand bouncing back in major markets like the US incentivized oil producers to operate at a higher capacity again to keep up with a surplus of demand in the world for oil. As a result, the price of Canadian oil increased sharply in 2021, growing at a monumental rate of 91.4%. In 2022, the Ukraine war caused increases in oil prices worldwide, pressuring many countries to produce at a higher capacity in place of Russia being sanctioned in response to their invasion of Ukraine.

These developments, concurrent with inflationary pressures from the rapid reopening of the economy in 2021, brewed into an overheated market where demand was high, which encouraged growth in production levels but kept supply chains bottlenecked, raising operating costs. As oil remains an essential input to fuel not only production but also vehicles, households and facilities, demand for oil remained growing exponentially in the period, keeping prices high and elevated as it gradually became a high-valued safe investment. However, more stringent measures to keep the environment safe in Canada, like the Greenhouse Gas Pollution Pricing Act, the Impact Assessment Act and with the Canadian Energy Regulator Act, have affected how oil industries conduct their operations without abiding by certain specific criteria set by these laws. With these factors, Canada's oil price grew 43.8% in 2022 alone.

With inflationary pressures continuing into 2023, oil prices remained elevated despite a decrease compared to 2022. As such, the appeal of such items is set to be more challenged in the year for consumers facing the economic pressures of inflation that were only sustained in the year for many items. However, the effects of inflation did not result in prices going up in 2023 as decisions to boost production in the year in response to economic headwinds and geopolitical turmoil resulted in an expanded rate of supply in the year for consumers alike even as certain industries did scale back in activities because of such factors, consumer spending remaining stable in the year in line with prices going up for many items did help producers in the year boosting up their production in response to such factors especially as gasoline sales did go up in the year according to IBISWorld estimates. As such, oil prices did go down by 21.0% in the year remaining still above levels sustained before the pandemic because of renewed pressure on the domestic market for more oil access because of factors like the Ukraine war in the year before and with a lot more countries building up their domestic supply chains in response to such factors and inflation, reliance on oil supplies from unsanctioned and reliable countries with expanded supplies and access to natural resources like Canada has become a new source of its appeal.

Though prices in 2024 rebounded, they are on pace to decline in 2025 due to the ongoing trade war between the US and Canada. Declining demand from the US is expected to lead to an oversupply in Canadian markets, causing prices to drop by an estimated 16.7% during the current year.

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5-Year Outlook – Price of Canadian oil

Long term, the price of Canadian oil is set to return to less volatile growth in the outlook peri...

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