Canada's energy sector plans cautiously amid policy uncertainties and shifting global dynamics
Andrew Botterill, energy and resources partner at Deloitte Canada, discussed the oil and gas outlook with Financial Post’s Larysa Harapyn.
He highlighted market stability, growth prospects, and challenges facing the sector in 2025.
Botterill noted that despite geopolitical turmoil in 2024, including conflicts in Israel and Ukraine, the oil market remained stable.
He said, “It’s amazing how truly stable and balanced the oil market was,” with prices ranging between $80 and $90 per barrel.
Looking ahead, he stated that 2025 is expected to mirror 2024, with prices averaging around $70 per barrel. However, if geopolitical negotiations bring more stability, prices may soften further.
Regarding US-Canada trade integration, Botterill highlighted the reliance of Gulf Coast and Midwest refineries on Canadian crude.
He acknowledged that while companies feel confident in the market’s supply and demand dynamics, they remain cautious about potential policy changes under the new US administration.
He added that firms are planning for growth but keeping portfolios flexible due to potential policy volatility.
On natural gas, Botterill outlined the contrast with oil. He stated that 2024 saw soft prices for Canadian producers as they ramped up liquefied natural gas (LNG) exports.
However, with multiple export projects coming online in Canada, the US, and Mexico, demand is set to rise. He projected natural gas prices to nearly double in 2025, giving producers more confidence in their budgets.
Investment in the sector is likely to grow, driven by optimism about stable oil prices and strong demand for natural gas. Botterill cautioned that companies might delay committing to long-term projects until policy uncertainties are resolved.
He said firms are adept at managing volatility and may adjust budgets if policy developments fall short of expectations.
Deloitte’s report forecasts oil prices to remain around $70 per barrel in 2025, with some market backwardation indicating potential softening towards year-end. The sector’s ability to navigate policy and market challenges will shape its growth trajectory in the coming year.
