Sudden shocks to a system are never good. Things break under stress, sometimes permanently, sometimes with unforeseen consequences.
In the oil world, things could start breaking in a matter of weeks. Here in Canada the situation is likely to be acute, because of our concentrated exposure to one customer, the United States.
Oil markets worldwide are under extreme stress. First, there’s the price war waged by The Organization of the Petroleum Exporting Countries — a deluge of barrels thrown into markets opportunistically during the COVID-19 pandemic.
The massive glut in oil — still unknown in magnitude, but potentially over 10 million barrels per day globally — has pounded the price of a premium barrel to near US$20. At that price, very few producers make enough money to sustain their longevity.
Prolonged financial stress, measured in months not years, will lead many oil producers to become distressed and some to die. It’s easy for people to be dismissive about this situation from an armchair, far away from where the oil and its petroleum products originate. Consumer detachment from our many supply chains leads to a lack of awareness about what goes on behind the scenes.
For the rest of this article: https://business.financialpost.com/commodities/energy/peter-tertzakian-the-crisis-facing-canadas-oilpatch-isnt-just-the-industrys-problem-its-everybodys?utm_term=Autofeed&utm_medium=Social&utm_source=Twitter#Echobox=1585217852