Oil Prices Rise as Wildfires Continue in Western Canada

Thousands of people have been evacuated from their homes in western Canada due to the ongoing wildfires, and some oil and gas companies have had to reduce output as the fires have moved closer to pipelines.

As of Monday, the wildfires have burned approximately 478,000 hectares or 1,800 square miles of land across Alberta, British Columbia, and Saskatchewan. This figure is ten times larger than the usual area burned during this period, as reported by the NASA Earth Observatory.

According to the Canadian Wildland Fire Information System, there were approximately 90 fires burning in the province of Alberta, with a quarter of them predicted to grow in size. There have been forced evacuations of almost 20,000 people.

The fires in the region have significantly affected the oil industry, leading certain drilling operations to temporarily suspend production as a precautionary measure. In response to the ongoing fires, Canadian heavy crude prices reached multi-month highs this week, raising concerns within the market.

According to Rystad Energy, an energy consulting business, about 2.7 million barrels of daily oil sands output in Alberta is in “very high” or “extreme” wildfire danger zones.

This week, air quality in many Alberta cities has been marked as “very high risk” by Canada’s Air Quality Health Index. Smoke from wildfires is expected to remain and perhaps worsen during the next week.

According to the BC Wildfire Service, the Peace Region in northeastern British Columbia between the Rocky Mountain Foothills and the Alberta Plains has experienced “aggressive fire behavior on all wildfires” with the onset of continuous winds from the north.

“We are in unprecedented drought conditions,” said the incident commander at the North Peace Complex, Scott Rennick.

The Canadian military and firemen from Canada and the United States are attempting to contain and put out the fires, but they may encounter difficulties if the wind shifts and the fires’ paths change.