{"id":24059,"date":"2026-01-16T22:21:55","date_gmt":"2026-01-16T22:21:55","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&#038;p=24059\/"},"modified":"2026-01-30T19:46:39","modified_gmt":"2026-01-30T19:46:39","slug":"top-risks-2026-a-cruder-world","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/the-growth-project\/top-risks-2026-a-cruder-world\/","title":{"rendered":"Top Risks 2026: A cruder world"},"content":{"rendered":"\n<section class=\"wp-block-rbc-section-block  pos-rel\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner\" style=\"border-radius:0x\">\n<p><em>This is a part of RBC Thought Leadership and Eurasia Group&#8217;s<a href=\"https:\/\/www.rbc.com\/en\/thought-leadership\/the-growth-project\/top-risks-2026-canada\/\" data-dig-id=\"LP-24059-82167e41\" data-dig-category=\"LP\" data-dig-action=\"link click\" data-dig-label=\" joint report\" class=\"rbc-link-format\"> joint report<\/a><\/em><\/p>\n\n\n\n<p><strong>A shift in global oil and gas prospects, from Venezuela to Qatar, changes the investment outlook for Albertan exports\u2014and the big infrastructure projects designed to get them to overseas markets.<\/strong><\/p>\n\n\n\n<p>Canada\u2019s ambitions to be an energy superpower\u2014including oil and gas\u2014is being tested after the U.S. intervention in Venezuela. But the challenges lie well beyond Canada\u2019s immediate neighbourhood. Long-term demand for oil and gas remains an open question, especially as Asia continues to turn to electrons to power growth. A global surplus of supply, including American LNG, clouds the picture further. And then there\u2019s the question of global growth. No growth, no need for more energy, from Canada or anywhere else.<\/p>\n\n\n\n<p>In one strategic swoop in Caracas, U.S. President Donald Trump has attempted to ringfence the Americas with Washington as its most consequential capital. In that respect, Trump may have weakened Canada\u2019s most valuable negotiating card\u2014energy exports. A resurgent Venezuela crude production could displace Canadian oil in the U.S. and leave it scrambling for market share with Saudis and others elsewhere. It\u2019s a potential competitive shock. Over the past 25 years, Canada had solidified its position as the foremost supplier of oil and gas to the world\u2019s biggest oil market, accounting for nearly three out of every five imported barrels entering the U.S. An industry built to serve America now pumps out a record five million barrels per day, compared to just over two million bpd in 2000, with more than 90% of its exports ending up in refineries in the U.S. Midwest, West Coast and the Gulf Coast.<\/p>\n\n\n\n<p>With the U.S. moving at lightning speed on securing its energy and resource needs, Canada needs to pivot quickly, not just to capture a portion of the investment dollars being spent in a hurry, but also to defend its turf and diversify its exports (hello, Xi)\u2014everything all at once to match the American blitz.<\/p>\n\n\n\n<p>Disruptions to the north-south energy flow could deal an economic and political blow to Canada. The industry generates close to $100 billion in annual revenues. A decline in energy exports could also test national unity. Failure to build out Alberta\u2019s oilsands will be seen by the province as a national declaration of political war, at a time when the province\u2019s independence movement is louder than it\u2019s been in a generation. Land-locked Alberta is also at odds with neighbouring British Columbia, which is opposed to building an oil pipeline across its territory to tidewater.<\/p>\n\n\n\n<p>Canada has a few strong cards to play. Venezuela may be home to the world\u2019s largest proven crude oil reserves, but Canada boasts the world\u2019s third largest, with the added advantages of a world-class infrastructure, ready expertise, technology and the capital to deliver on America\u2019s oil needs. After decades of dithering, Ottawa, under Mark Carney, seems to have the will to follow through.<\/p>\n\n\n\n<p>There\u2019s a strong correlation between Canadian oil\u2019s supremacy in the U.S. coinciding with Venezuelan crude\u2019s steady decline (see chart). Both trade primarily in what\u2019s known in the business as \u201cheavy oil,\u201d which has the consistency of peanut butter\u2014it\u2019s harder to extract from the ground, is energy and carbon-intensive to produce, and needs thinning diluents to push through pipelines, adding to shipping costs. Canadian oil\u2019s viscous nature makes it ideal for making gasoline\/diesel, jet fuel and plastics, compared to the light blend pumped out from American shale basins.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2554\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?quality=80\" alt=\"Canada's oilsands has displaced Mexican and Venezuelan heavy oil in the U.S.\" class=\"wp-image-24129\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?resize=300,192 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?resize=768,490 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?resize=1024,654 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?resize=1536,981 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/TL-Graphs-Crude-Oil-Risk-3.png?resize=2048,1308 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<p>As Canadian oilsands firms innovated over the past decade to overcome cost and emissions intensity, Venezuela\u2019s state-owned Petr\u00f3leos de Venezuela (PDVSA) fell into a state of neglect, mismanagement, and corruption. Another blow: in 2018, the company was looted by thieves, stripping the oil company of vital equipment, including copper wiring, and its skilled workers fleeing to neighbouring states. If U.S. firms return to Venezuela, they will have to start from scratch in many ways, with some suggesting it will cost upwards of US$100 billion over 10 years to get the Venezuelan oil sector up and running. In a best-case scenario, it would take at least a decade to displace some of Canada\u2019s 4.5 million bpd of oil shipments to the U.S. from Venezuela, which currently produces around 750,000 bpd. That would give Canada a head start to adjust to the new energy paradigm.<\/p>\n\n\n\n<p>Heavy oil is deeply integrated into U.S. refinery systems, which should give oil executives in Calgary some comfort. As early as the 1990s, U.S. refiners began investing billions in heavy-sour configurations to run Canadian and Latin American barrels, given the proximity of both energy sources. Total refining capacity in Gulf Coast refineries (known as PADD 3) rose 2.9 million barrels per day, while Midwest refineries (PADD 2) grew 700,000 bpd. Both regions boosted coker capacity of 1 million bpd during the period.<\/p>\n\n\n\n<p>U.S.-Canadian joint ventures also started to spring up, such as Cenovus and ConocoPhillips collaborating on two refineries in the U.S. as cross-border upstream and downstream flows became entrenched. Meanwhile, Canadian pipeline operators Enbridge and South Bow (spun off from TC Energy) cast a wider system of pipeline spurs and added capacity to reach the Gulf Coast and the Midwest.<\/p>\n\n\n\n<p>Canada\u2019s heavy oil is prized in other markets. While much is made of China becoming an electro-state and other Asian markets switching to renewables, there are few viable substitutes for heavy oil as a critical ingredient for plastics. Rising income levels across Asia is set to fuel ever more demand for TVs, refrigerators, electronics, and Labubu dolls, even as population growth in many emerging markets tapers off. The federal government-owned TMX pipeline expansion has already demonstrated a market for Canadian oil outside the U.S. While overall more than 90% of Canadian oil exports are destined for the U.S., only a third of TMX\u2019s shipmentsended up across the border with the rest shipped to refineries in China, Singapore, South Korea and India.<\/p>\n\n\n\n<p>After all, Asia is where the growth\u2019s at, especially with Europe set to see declining demand. The continent is forecast to account for 80% of total net oil demand growth until 2030, according to the IEA. Indian demand alone is expected to grow almost one million bd, with emerging Asia also in the market for more barrels.<\/p>\n\n\n\n<p>There\u2019s also the perennial question of the value of Canada spending billions on an industry presumed to be slowing down\u2014in a crowded market. While the International Energy Agency recently retreated from its \u201cpeak oil\u201d forecast, global demand is inching up only slowly while producers ramp up. New player Guyana, led by production from a three-way ExxonMobil-Chevron-CNOOC venture, has quickly boosted production to around 900,000 bpd in a short span of time. Several OPEC producers and independents such as Brazil, Mexico and Norway also have ambition to pump up oil volumes. While the Saudis, the most influential OPEC producer, have been quiet as U.S. moves threaten to drive down oil prices, Brent crude prices of around US$60 per barrel are nowhere near Saudi government\u2019s fiscal breakeven prices of around US$90.<\/p>\n\n\n\n<p>For Canadian oil firms, which spent roughly $25 billion in dividends and buybacks in 2025, the risk is to embark on a new capital-intensive project without a new pipeline proposal or much visibility when it comes to market direction. Another caveat: Ottawa would insist companies contribute to a much-anticipated and expensive carbon capture storage and utilization (CCUS) project to offset new emissions. Indeed, it\u2019s in writing as part of the Ottawa-Alberta Memorandum of Understanding.<\/p>\n\n\n\n<p>The MoU, which offers a path for the oil industry\u2019s expansion and inject a new investment wave in the country, is an iconic symbol of what Canadian energy can achieve. If it succeeds, the MoU could serve as a model for how Canada can deliver its resources, assets and expertise to a customer base beyond the United States.<\/p>\n<\/div>\n<\/section>\n\n\n\n<section class=\"wp-block-rbc-section-block  pos-rel\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner\" style=\"border-radius:0x\">\n<div class=\"wp-block-columns has-border-color has-grey-border-color is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\" style=\"border-width:1px\">\n<div class=\"wp-block-column has-border-color has-grey-border-color is-layout-flow wp-block-column-is-layout-flow\" style=\"border-width:1px;flex-basis:33.33%\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"572\" height=\"362\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/Top-Risks-2026-Canada-Edition-Download-PDF-EN.jpg?quality=80\" alt=\"\" class=\"wp-image-24114\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/Top-Risks-2026-Canada-Edition-Download-PDF-EN.jpg 572w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2026\/01\/Top-Risks-2026-Canada-Edition-Download-PDF-EN.jpg?resize=300,190 300w\" sizes=\"auto, (max-width: 572px) 100vw, 572px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:66.66%\">\n<h3 class=\"wp-block-heading mar-t mar-l\" id=\"h-download-the-report\">Download the Report<\/h3>\n\n\n\n<div class=\"wp-block-buttons  mar-l is-layout-flex wp-block-buttons-is-layout-flex\"><div>\n<div class=\"wp-block-button btn before is-style-tertiary tertiary\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/Eurasia-Group-and-RBC-Thought-Leadership-Top-Risks-2026-Canada.pdf\" data-dig-id=\"LP-24059-09519300\" data-dig-category=\"LP\" data-dig-action=\"button click\" data-dig-label=\"Download-https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/Eurasia-Group-and-RBC-Thought-Leadership-Top-Risks-2026-Canada.pdf \">Download<\/a><\/div>\n<\/div><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n\n\n\n<section class=\"wp-block-rbc-section-block  pos-rel mar-t mob-mar-t mar-b mob-mar-b has-rbc-bright-blue-tint-1-background-color has-background\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner pad-t mob-pad-t mob-pad-b pad-b\" style=\"border-radius:0x\">\n<p class=\"mar-b-qtr mob-mar-b-qtr has-white-color has-text-color has-link-color wp-elements-2e93fa86336b7417882d34d73a095595\"><strong>Contributors to the RBC Thought Leadership and Eurasia Group&#8217;s joint report: &nbsp;<\/strong><\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-82c90add5da667172f400ce7d3a0f1cf\"><strong>Gerald M. Butts<\/strong>: Vice Chairman and Senior Advisor, Eurasia Group<\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-69fc2cb9aec1785cf92737c2b9ec3085\"><strong>Graeme Thompson<\/strong>: Senior Analyst\/Global Macro, Eurasia Group<\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-4b9c1f0648eeec1cd72c2f62fdb1635d\"><strong>John Stackhouse:<\/strong> Senior Vice President, RBC Thought Leadership, Office of the CEO<\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-ce6d0c8a2c957a5ba8acc06bab86c8d6\"><strong>John Intini<\/strong>: Senior Director, Editorial, RBC Thought Leadership<\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-0ac321e894a34d673a8664cf1a8585d9\"><strong>Yadullah Hussain<\/strong>: Managing Editor, RBC Thought Leadership<\/p>\n\n\n\n<p class=\"mar-b-0 mob-mar-b-0 has-white-color has-text-color has-link-color wp-elements-6fab05388a0e35e9a2f068d0427afe0f\"><strong>Jackie Pichette<\/strong>: Policy Lead, Skills and Higher Education, RBC Thought Leadership<\/p>\n\n\n\n<p class=\"has-white-color has-text-color has-link-color wp-elements-24d473ecd27e2cb689a907299013856c\"><strong>Shaz Merwat<\/strong>: Policy Lead, Energy, RBC Thought Leadership<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>A shift in global oil prospects changes the outlook for Albertan exports \u2013 and the projects to get them to overseas markets<\/p>\n","protected":false},"author":89,"featured_media":24263,"parent":0,"menu_order":0,"template":"","meta":{"_acf_changed":false,"disable_focal_point":false,"featured_image_focal_point":{"x":0.72,"y":0.53},"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"rbc_tl_category":[196],"rbc_tl_tag":[],"class_list":["post-24059","rbc_tl","type-rbc_tl","status-publish","has-post-thumbnail","hentry","rbc_tl_category-the-growth-project"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Top Risks 2026: A cruder world -<\/title>\n<meta name=\"description\" content=\"A shift in global oil prospects changes the outlook for Albertan exports \u2013 and the projects to get them to overseas markets.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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