The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures widened on Wednesday for the first time since the U.S.-Israeli war on Iran began.
WCS for April delivery in Hardisty, Alberta, settled at $12.45 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared with $12.40 on Tuesday.
* With the Strait of Hormuz closed, there is a supply shortage of heavy and sour grades of crude oil in Asia, which should create demand for Canadian heavy barrels exported off the British Columbia coast via the Trans Mountain pipeline, said Enverus analyst Michael Berger.
* While there is potential for heavy Canadian barrels to shift away from U.S. refining destinations towards Asia as a result of this increased demand, Berger said he does not expect Canadian oil sands companies to significantly increase production due to the crisis in Iran.
* “We think it will be largely business as usual in terms of deploying capital into their programs throughout the next couple of months,” Berger said. “And that’s just because of the uncertainty about how long it will take for this situation to resolve.”
* Oil prices settled unchanged on Wednesday at the end of a volatile trading session, as escalating U.S. and Israeli strikes against Iran widened regional tensions and paralysed shipping through the Strait of Hormuz for a fifth day, disrupting vital Middle East oil and gas flows.
(Reporting by Amanda Stephenson in Calgary; Editing by Shinjini Ganguli)