Canadian oil producers prepared for temporary price slump as virus spreads

OTTAWA — Canada’s energy industry is not overly alarmed as the new coronavirus coming out of China is taking a bite out of world oil prices.

Brad Herald, a vice-president at the Canadian Association of Petroleum Producers, says “there are some short-term jitters” among Canadian producers as they watch global travel slow as a result of the outbreak.

But Herald says the impact will be felt only while the virus is still spreading and that the industry has contingency plans for situations like this.

The SARS outbreak in 2003 saw oil prices drop as air travel plummeted but they rebounded once the virus was contained.

Investment firm Goldman Sachs suggested last week the coronavirus could reduce global demand by about 260,000 barrels a day, mostly from a decline in international air travel.

On Tuesday, Air Canada became the latest airline to cut back on flights to and from China as that country slows domestic and international flights as part of efforts to control the spread of the virus.

This report by The Canadian Press was first published Jan. 29, 2020.

The Canadian Press