Oil Daily | Alberta Wildfires Cut Oil Output by 350,000 Barrels, Driving Price Rally Amid Global Tightness

【Global Oil Supply and Demand】

Wildfires in Alberta have severely impacted oil production, cutting down close to 350,000 barrels daily, or about 7% of the province’s total. This disruption has contributed to a rally in oil prices. Meanwhile, the OPEC production update also played a role in price fluctuations, as expectations for a bigger output hike did not materialize, causing relief in the market.

Maintenance season for U.S. LNG plants led to a decline in exports in May, with figures dropping from an all-time high in April. Despite short-term demand uncertainties due to pricing volatility, U.S. producers remain optimistic and are planning to increase production. Federal authorization for new LNG exports is expected to further boost output.

Canada's Alberta province faces significant wildfire challenges, with over 50% of oil production forced offline. Evacuations and operational halts have been reported, echoing past crises. The fires threaten critical infrastructure, adding pressure to the tightening global crude market already facing heavy crude shortages due to sanctions and reduced outputs.

【Oil-Producing Countries Dynamics】

The latest escalation in tensions between Russia and Ukraine is expected to impact Russian oil targets. Simultaneously, Iran’s expected rejection of a U.S. nuclear proposal implies continued sanctions on Iran’s oil industry, maintaining supply restrictions. China is likely to continue benefiting from discounted Iranian crude.

Turkey's TPAO is set to sign a partnership with BP and Socar for natural gas development in the Caspian Sea. This move is part of Turkey’s broader strategy to enhance its international partnerships and increase domestic production, alongside exploration initiatives in the Black Sea and Iraq.

【Latest Oil Policies】

The Trump Administration aims to roll back restrictions on oil and gas drilling in Alaska imposed by the Biden administration. This initiative seeks to expand exploration opportunities in the Arctic National Wildlife Refuge and the National Petroleum Reserve. The administration is also promoting the Alaska LNG project, seeking Asian investors to bolster development.

【Industry News】

Canada is pushing to fast-track major energy projects to assert itself as an energy superpower, according to Prime Minister Mark Carney. Efforts are focused on enhancing accessibility for Alberta’s energy resources to international markets and reducing federal oversight in emissions reductions. The energy sector is seeking reforms for faster project approvals and infrastructure development.

【Company News】

Cheniere Energy, Venture Global, and Golden Pass LNG are preparing to increase LNG production in the U.S. Cheniere plans to start new trains at its Corpus Christi plant, while Venture Global completes work at Plaquemines, and Golden Pass begins production. Sempra Energy has secured federal authorization for LNG exports from Texas.