Saudi Arabia’s restrained statement today calling on the United Nations to investigate attacks on its oil facilities suggests the kingdom is going to bide its time as it plans its next move. But make no mistake, it’s not the last we have heard on this issue.
The vulnerability of Mideast supplies certainly gives Alberta producers an opportunity to make their case for investors to return to the Canadian oilsands — not that we don’t have our own unique set of challenges, as Geoffrey Morgan notes in his report.
While Canada may be unable to take advantage of the volatility in oil markets any time soon, Canadians will certainly pay higher prices at the pump immediately. Some reports suggest gas prices could surge 8 cents as soon as today after crude climbed as much as 19 per cent on Monday.
The Saudi attacks certainly stole the limelight away from what was going to be the defining event of the week: the U.S. Federal Reserve’s decision on interest rates on Wednesday.
Oil price volatility appears to have strengthened the case for a rate cut. Add in global trade tensions, and it all but guarantees the Fed will lower policy rates another 25 bps, according to Bank of Montreal.
“Investors will eye the statement and ‘dot plot’ for hints of a third rate cut on October 30. The statement and Powell’s presser should leave the door open for such a possibility by repeating the ‘act as appropriate’ pledge,” wrote BMO senior economist Sal Guatieri along with colleagues in a note to clients.
Meanwhile, Naomi Powell reports that a strike against General Motors’ American factories would deliver a blow to the firm’s Canadian parts suppliers “within days” as a highly integrated cross-border supply chain stutters to a halt.
Here’s what’s you need to know this morning:
- Liberal Leader Justin Trudeau makes a policy announcement in St., John’s, Newfoundland
- Conservative Leader Andrew Scheer makes an announcement in Winnipeg
- In Ottawa, NDP Leader Jagmeet Singh makes an announcement on the NDP’s plan to make housing more affordable for Canadians
- The Ecology Action Centre releases a report on climate jobs and the green economy in Halifax
- Statistics Canada releases its monthly survey of manufacturing for July
- The Department of Finance Canada releases the Annual Financial Report of the Government of Canada that summarizes the government’s financial results for the fiscal year ending March 31, 2019, including the budgetary balance, in Ottawa
- RCMP Commissioner Brenda Lucki provides a short update on the matter related to the ongoing investigation, arrest and charges against Cameron Ortis
- Human rights and arms control advocates discuss the ways in which Canadian export laws do not meet the full requirements of the Arms Trade Treaty, explain how recent developments in the conflict in Yemen necessitates a review of Saudi arms exports, and renew their calls to immediately suspend or cancel the arms exports agreement with Saudi Arabia, in Ottawa
- A national partnership of housing organizations launch the 2019 Canadian Rental Housing Index to provide data highlighting the ridings, regions, and provinces being hardest hit by Canada’s rental housing affordability crisis in Toronto
- The UNITE summit provides insight into our global energy future and addresses the opportunities and challenges presented by game-changing technologies, global trends, disruptive innovations, and cross-industry collaborations in Calgary
- Saskatchewan Premier Scott Moe gives a luncheon address to the Regina and District Chamber of Commerce, entitled “”Canada at a Crossroads: The state of Saskatchewan, the Canadian federation, and our shared economic prosperity“ in Regina
- Corporate Events: Canopy Growth Corp. annual meeting in Toronto; Atco and Canadian Utilities investor day in Calgary
This weekend, the ultimate test of oil facility security — and one of the biggest geopolitical events to hit oil markets in decades — was the drone attacks targeting some of Saudi Arabia’s most important oil installations. It knocked more than five per cent of the world’s total oil production offline. For oil markets, it’s the single worst sudden disruption ever, and while Saudi Arabia may be able to return some supply within days, there’s the heightened danger of conflict in a region that holds almost half of global crude reserves. “Political-risk premiums are now back on the oil-market agenda.”
With files from The Canadian Press, Thomson Reuters and Bloomberg