The Western Canadian Select benchmark hit US$25.88 in late afternoon trading, a 15 per cent drop. Oil futures in London and New York posted their largest drops since the 1991 Gulf War. (The Logic)

Talking point: The Canadian oil industry was already bracing for a difficult year and had started to price in reduced Chinese demand because of COVID-19. The Saudi and Russian production push ends a truce between the countries that’s lasted since 2016, which had kept oil prices high. The target is U.S. shale firms, which spend more per barrel to produce and have been gaining a larger share of the world market. Canadian firms will be affected, as well. At close, Calgary-based Cenovus Energy was already down 53 per cent at close; Canadian Natural Resources dropped 31 per cent; and Suncor fell 19 per cent. Analysts warned that firms that cannot cut back on their capital expenditures will be most at risk. It’s not just oil firms. The Alberta government’s budget is based on oil prices being at US$58 per barrel in 2020. Every one-dollar drop translates to a $355-million fall in government revenue. Today’s already low prices could well drop further—Goldman Sachs is predicting prices could decrease to near US$20 a barrel. Meanwhile, Mark Machin, CEO of the Canada Pension Plan Investment Board, told the Calgary Chamber of Commerce Monday that his fund is “deeply committed to the energy industry and our investments in Alberta.”