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At more than four million barrels a day, Canadian crude makes up about half the supply imported into the U.S. A motorist drives past the CHS oil refinery on Sept.
28, 2024, in McPherson, Kan. Charlie Riedel/The Associated Press While 2024 was hardly a year of global stability, energy analysts say 2025 could bring more volatility, geopolitical tension and policy evolutions. In its 2024 Energy Outlook, published in October, the International Energy Agency said there is high potential for near-term disruption to oil and gas supply owing to conflict in the Middle East.
However, while geopolitical risks remain elevated, the IEA says an easing in underlying market balances and prices is on the horizon as slowing oil demand growth sees spare crude oil production capacity rise to eight million barrels a day by 2030. Underscoring that theme of global uncertainty, the Oslo-based research firm Rystad Energy points to elections in almost all major global economies in 2024, which have set the stage for shifting policies in 2025. That’s particularly true in the United States, where president-elect Donald Trump has been clear he wants to increase domestic oil production and slap tariffs on imports from outside countries – including Canada.
Jarand Rystad, the founder and chief executive of Rystad, looked into his crystal ball in a recent research note. He reckons that the U.S.
oil industry is unlikely to respond to potential stimulus by a Trump administration. Instead, he said the incoming president might have more success in accelerating liquefied natural gas infrastructure investments, even if the results won’t be felt for several years. “These dynamics underscore the importance of careful navigation as the sector balances short-term challenges with long-term opportunities,” Mr.
Rystad said. Indeed, a recent study by S&P Global found that although LNG was never really meant to be a U.S.
export, the industry has contributed US$408-billion to the country’s gross domestic product since 2016. It’s poised for even more growth, according to the study, on track to contribute US$1.3-trillion to GDP by 2040.
The growth is reflected around the world. According to the IEA, a wave of new LNG projects is set to add almost 50 per cent to the fuel’s available export capacity by 2030. The big question for Canada in 2025 is potential tariffs on oil and gas exports to its southern neighbour.
Mr. Trump raised the prospect of 25-per-cent import duties on Canadian and Mexican products in late November. Although he did not mention oil and gas specifically, it put Canadian government officials and the oil and gas sector on high alert.
At more than four million barrels a day, Canadian crude makes up about half the supply imported into the U.S. The oil is a mainstay primarily for refineries located in the U.
S. Midwest that have been configured to process the heavier Canadian blends. “It comes down to: The type of quality that U.
S. refineries need is what we have here in Canada, and to apply a tariff on that doesn’t make sense when you can’t produce it yourself,” said Jeremy McCrea, analyst at BMO Capital Markets. The U.
S. is Alberta’s largest international trading partner, with crude petroleum – including from the oil sands in the province’s north – making up the bulk of Alberta’s exports. Total international merchandise exports from the province reached $15.
1-billion in September and the U.S. accounted for $13.
3-billion of that, according to provincial data published in November. Premier Danielle Smith’s United Conservative Party government has already begun strengthening its ties with U.S.
officials. Days after Mr. Trump’s election victory, she signed a key energy pact with a dozen American states.
By joining the Governors’ Coalition for Energy Security, Alberta hopes to leverage a network of influential state governors should Mr. Trump follow through with tariffs. Mr.
Rystad and the IEA reckon the push for decarbonization will continue in 2025, even as economic instability, evolving energy demands and infrastructure constraints present challenges along the way. The IEA also noted in its outlook that global greenhouse gas emissions are set to peak soon, but will then have to decline rapidly. That means consumer choices and government policies that play out will have huge consequences for energy markets and the planet.
Mr. Rystad said capacity additions in fossil fuels and renewables will outpace increases in demand in 2025. And, in the face of an oversupplied oil market, OPEC+ producers may need to extend output cuts far into the year to protect oil prices.
“The era of China driving oil consumption growth is over, with the country’s peak diesel in the rear-view mirror, gasoline demand plateauing and coal consumption levelling off, as it is globally,” he wrote. On the electricity front, he said about 90 per cent of power consumption growth in 2025 will come from renewables, with nuclear and natural gas sharing the remaining 10 per cent. That’s reflected in IEA analysis, too, which has clean energy meeting virtually all growth in energy demand between 2023 and 2035, leading to an overall peak in demand for all three fossil fuels before 2030.
However, it notes that trends vary widely across countries at different stages of economic and energy development. Solar manufacturing capacity in 2024 hovered around 1,100 gigawatts per year, potentially allowing for deployment almost three times higher than in 2023. To avoid intermittency problems that come with renewable power, however, Mr.
Rystad suspects 2025 could be a breakout year for energy storage systems..
