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Unlike during the thick of the COVID-19 pandemic, economic woes are not dragging down fuel demand this time, said Rory Johnston, founder of the Commodity Context newsletter. 

"The irony of it is that demand ... has actually been fairly robust thanks to a recovery in China," he said. 

"What has been the bigger challenge is that supply has been growing at more than three times the pace of demand this year." 

While members of the Organization of the Petroleum Exporting Countries and its allies unwind earlier production cuts, output is also rising in the United States, Canada, Brazil and new market entrants like Guyana, said Johnston. 

Supplies are also building up on the world's oceans as tankers carrying crude from countries under U.S. sanctions, such as Russia and Venezuela, float around looking for buyers.  

Prices would be much weaker if not for sporadic geopolitical turmoil that's flared up this year, including the Israel-Iran conflict in June, Johnston added. 

If countries facing sanctions end up reducing their output, it could help bring global markets back into equilibrium, Johnston said. Then, it would fall to U.S. shale producers and OPEC+ to cut back. U.S. players are relatively high cost, so they'd likely move first, he said.

Al Salazar, head of macro oil and gas research at Enverus, agreed American producers will likely be the first to blink. 

"OPECs got deep pockets," he said. "I think they're going to wait for the U.S. producers to come off and have them balance the market ...This is a bit of a painful but convenient way for OPEC to recalibrate what it produces and how much market share they have." 

ºÃÉ«tv oil producers have been "battle-tested" by past downturns and have driven down costs to the point that they can withstand prices much lower than they are today, said Salazar. 

"I suspect that our production here is going to be quite resilient despite low prices," he said. 

Cenovus Energy Inc., one of Canada's biggest oil and gas producers, said in its 2026 budget announcement last week that operating costs in the oilsands next year are expected to come in between $11.25 and $12.75 per barrel. Its offshore platforms in Atlantic Canada, meanwhile, have costs of $35 to $45 per barrel. 

Suncor Energy Inc. said its oilsands operations' cash operating costs are expected to be between $26 to $29 per barrel next year. It is anticipating a full-year WTI oil price of US$62 per barrel. Every US$1 per barrel change in WTI would have about a $215-million impact on the company's full-year outlook for 2026, Suncor said last week. 

What will hurt, Salazar said, is the Alberta government's revenues, which are heavily dependent on natural resource royalties. 

In its second-quarter economic statement last month, the Alberta government said it's expecting WTI to average US$61.50 in the 2025-26 fiscal year, lower than the US$68 it had predicted in its February budget. 

Over the course of a year, the provincial government estimates that every US$1 per barrel swing in the WTI price has an impact of $750 million on its coffers. 

Another factor working in favour of ºÃÉ«tv oil companies is the fact that the price difference has been relatively narrow between WTI and the heavier, trickier-to-refine crude from the oilsands, Western ºÃÉ«tv Select. The Alberta government says the WTI-WCS differential has averaged around US$10-12 a barrel in recent months. 

That's thanks in large part to the startup last year of the Trans Mountain pipeline expansion to the Vancouver area, which has enabled the first exports of ºÃÉ«tv crude to Asian markets in meaningful amounts. 

It's a far cry from October 2018, when the differential expanded to US$43 per barrel, with some trading days seeing it grow to more than US$50 amid a lack of pipeline capacity. As a result, the Alberta government announced it would impose a cap on how much oil companies can produce. 

"We currently have a very healthy (Western ºÃÉ«tv Select) differential," Johnston said. 

"So even if (WTI) prices fell to US$40, that would still actually be a better pricing environment for Western ºÃÉ«tv crude given the differentials that we experienced in 2018."

This report by ºÃÉ«tvwas first published Dec. 17, 2025.