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In early 2014, oil prices shot above US$100 a barrel — capping off a highly lucrative boom — but then the market turned. In the United States, shale production was surging, demand growth was weakening and, crucially, the Organization of Petroleum Exporting Countries (OPEC) chose not to cut production.
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The price crash that followed triggered layoffs, lower spending and a long, painful reset in Alberta’s oilpatch.
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That history matters now partially because OPEC is facing another test.
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The United Arab Emirates says it is leaving the group and the wider OPEC+ alliance. The move raises questions about how much control the cartel can still exert over global oil supply.
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OPEC began in 1960, when Iran, Iraq, Kuwait, Saudi Arabia and Venezuela came together to give these oil-producing countries more influence over their own resource. For decades, its power came from coordination. If major producers held back supply, prices could rise. If they produced more, prices could fall.
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For Canadians, that cuts both ways, because lower oil prices can help drivers, airlines, trucking companies and businesses that depend on fuel. But they can also hurt oil-producing provinces by reducing profits, investment, royalties and hiring.
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After the 2014 downturn, Alberta producers became more cautious. Many focused less on rapid growth and more on costs, debt, dividends and efficiency. Calgary’s office market, government revenues and oilpatch employment all felt the impact.
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The UAE’s exit may not cause an immediate shock. Saudi Arabia remains central to the cartel, and OPEC plus still includes major producers such as Russia. But if the group becomes less united, the market could become harder to manage.
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For Canada, the issue is not just whether prices rise or fall. It is uncertainty. A less coordinated oil market could make it harder for workers, companies and governments to plan for what comes next.
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English (US)