{"id":502503,"date":"2026-02-27T06:40:12","date_gmt":"2026-02-27T06:40:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/502503\/"},"modified":"2026-02-27T06:40:12","modified_gmt":"2026-02-27T06:40:12","slug":"alberta-budget-2026-province-paints-rosy-oil-price-forecast-despite-resource-driven-shortfall","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/502503\/","title":{"rendered":"Alberta Budget 2026: Province paints rosy oil price forecast despite resource-driven shortfall"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Despite Premier Danielle Smith\u2019s warning about oil prices, the provincial budget is more positive than energy watchers are about how much oil will sell for in the next two years.Jeff McIntosh\/The Canadian Press<\/p>\n

Alberta is projecting oil prices far beyond the expectations of forecasting agencies, industry and most banks in 2026 and 2027, despite a multibillion-dollar fossil fuel-based wallop that is set to send the province\u2019s budget deep into the red. <\/p>\n

Budget 2026, released Thursday, estimates that cash from non-renewable resources will reach $13.2-billion in the 2026-27 fiscal year – roughly 18 per cent of the province\u2019s total revenues. That\u2019s $8.8-billion less than the sector brought in during the 2024-25 fiscal year, and $3.1-billion lower than the province had previously forecast. <\/p>\n

The government attributes the nosedive to a couple of factors: lower benchmark oil prices, including West Texas Intermediate, and a wider gap between WTI and the Western Canadian Select price that Canadian producers receive for their product.<\/p>\n<\/p>\n

Despite Premier Danielle Smith\u2019s recent warning<\/a> that Albertans must prepare to feel the pinch because of oil prices, the provincial budget paints a much rosier picture than energy watchers do about how much barrels will sell for in 2026 and 2027. <\/p>\n

The government\u2019s WTI forecast for 2026 is US$60, for example, compared with the private market average of US$58. (At the low end of the scale, the U.S. Energy Information Administration forecasts US$52, while National Bank is predicting US$68.)<\/p>\n

The difference between Alberta and the market widens even further in 2027. The government reckons WTI will hit US$66, while private forecasts average US$60.50. <\/p>\n

Asked how confident he is about Alberta\u2019s own oil price estimates, Finance Minister Nate Horner said he has \u201ca lot of trust\u201d in the province\u2019s chief economist, Catherine Rothrock.<\/p>\n

\u201cIt\u2019s a pretty educated forecast. I\u2019d say she\u2019s got a better track record than industry,\u201d he told media.<\/p>\n

Alberta\u2019s outlook does not reflect the commonly bleak view of oil prices among analysts, however. <\/p>\n

At the heart of the depressed oil price environment is a global oil glut, which has significantly imbalanced supply and demand. <\/p>\n

Susan Bell, the senior vice-president of oil research at Rystad Energy, said in an interview she expects oil prices to soften over the near term and into 2027 as oversupply dogs the market before a correction begins in early 2028. <\/p>\n

Kevin Birn, the chief analyst for Canadian oil markets at S&P Global, puts global supply growth at nearly two million barrels this year. The result will be marked downward pressure on oil prices, he said in an interview, with the global Brent benchmark price hitting US$60 over the course of the year – and WTI even lower. <\/p>\n

Then there are the wildcards of the global oil sector, including potential production growth from Venezuela or Libya, and whether U.S. producers – which tend to be more exposed to the effects of low prices compared with Canadian oil sands companies – increase their output. <\/p>\n

Voluntary production cuts by OPEC are an unlikely prospect given \u201cthere\u2019s not an awful lot of political will for them to do that,\u201d Ms. Bell said. <\/p>\n

With all of those factors combined, she called Rystad\u2019s view of near-term pricing \u201cdire.\u201d<\/p>\n

\u201cIf the balance plays out as it is on paper right now, where we\u2019ve got a glut of about two million barrels a day in 2026, the fundamental view is something that you wouldn\u2019t want to write,\u201d she said.<\/p>\n

On the flipside, the world commodity price environment is subject to various geopolitical pressures that can turn on a dime, reducing global supplies. <\/p>\n

China could stockpile more crude than it is right now given the current low-price environment, for example. Rystad\u2019s assessment is that the Asian country will stockpile roughly 200,000 barrels a day this year, which Ms. Bell could continue into 2027 because the country\u2019s inventories aren\u2019t yet full. <\/p>\n

Then there is the question of what will happen in Iran, which produces roughly 3.3 million barrels of oil per day. <\/p>\n

The country is struggling with growing dissent following countrywide protests last month, and U.S. President Donald Trump has repeatedly threatened to attack<\/a> if negotiations fail on a deal to constrain Iran\u2019s nuclear program. Mideast countries fear an attack could spiral into a new regional war, as the U.S. gathers a massive fleet<\/a> of aircraft and warships in the region. <\/p>\n

Russia could also cut production if sanctions harden in the face of continuing aggression against Ukraine, Ms. Bell said, and U.S. shale producers might reduce output if lower prices put pressure on producers.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Geopolitical pressures could force countries to reduce supply, but Canadian oil sands companies would be unlikely to shrink their output.Victor R. Caivano\/The Canadian Press<\/p>\n

The oil sands companies that comprise the bulk of Canadian crude production, however, are unlikely to shrink their output. <\/p>\n

\u201cWe think of Canadian oil sands as baseload oil, because it\u2019s a very inflexible source of supply,\u201d Mr. Birn said. \u201cWhen oil prices fall, they\u2019re actually incented to produce more because a big chunk of their costs are fixed.\u201d <\/p>\n

Alberta\u2019s budget forecasts that non-renewable resource revenue will increase to $16.2-billion in 2027-28 and $16.9-billion by 2028-29. <\/p>\n

The government said in the budget that Alberta\u2019s resource-intensive economy \u201cmakes it uniquely sensitive to global economic and market conditions.\u201d It plans to conduct a broad review to figure out how to better support sustainable fiscal planning. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Despite Premier Danielle Smith\u2019s warning about oil prices, the provincial budget is more…\n","protected":false},"author":2,"featured_media":502504,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,90915,45,49,48,46,4717,9891,99224,16724],"class_list":["post-502503","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-budget-2026","tag-business","tag-ca","tag-canada","tag-economy","tag-energy","tag-oil-prices","tag-wcs","tag-wti"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/502503","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=502503"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/502503\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/502504"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=502503"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=502503"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=502503"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}