A trade war sparked by the US on Canadian imports — including energy — needs a rapid resolution, said a Canadian conventional oil and gas advocacy group.
A 10pc tariff on Canadian energy will increase energy costs "to all Americans to heat their homes and fuel their vehicles," said the Explorers and Producers Association of Canada (EPAC).
The US tariffs went into effect at 12:01am ET on Tuesday, and include a 25pc tariff on all other non-energy imports. A 25pc tariff was also placed on all imports from Mexico while an existing tariff on China was doubled to 20pc.
Canada in turn retaliated with a 25pc tariff on $30bn of US imports, followed by another $125bn of imports in 21 days' time. China imposed new tariffs on the US while Mexico is planning a retaliatory measures of its own.
The trade action threatens to disrupt flows from the resource-rich country, including its largest export: oil and gas. Canada accounts for 60pc of all US crude imports, with refiners in the US midcontinent having few alternative supplies.
EPAC represents 100 producer and associate members who produce 40pc of Canada's crude and 65pc of the country's natural gas.
The lobby group encouraged the Canadian government to continue to work on border security concerns that the US had raised and take a measured approach in its response.
"This crisis demonstrates the clear and urgent need to take immediate action to build natural resource infrastructure and diversify our economy to other markets beyond the United States," EPAC said.
Heavy sour WCS priced at Hardisty, Alberta, was assessed at a discount of $13.80/bl to the April Nymex WTI calendar month average on 3 March, wider by about 95¢/bl compared to the session prior.
Even with the weakening, the WCS differential is still narrower than the eve of the previous trade threat on 3 February — before a deal was struck to delay the tariffs by 30-days — when it sank as low as a $15.75/bl discount, suggesting traders may have already priced in the trade action ahead of the latest threat.
Support for the price could also be coming from upcoming turnaround season in Alberta's oil sands region.
