The CEO of Canada’s sixth-largest commercial bank has called Saudi Arabia’s oil price cuts an “act of economic warfare.”
In an interview with the Financial Post, National Bank of Canada CEO Louis Vachon said that governments will need to address Saudi Arabia’s decision to slash prices.
“The governments have been very focused on the COVID-19 situation, rightfully so, but at some point over the next few weeks or next few months we will have to address the other problem related to the energy industry, which was that particular policy by that government,” said Vachon.
The Saudi kingdom’s decision to start an oil price war at the height of the coronavirus pandemic has been devastating for the price of Canadian oil.
Alberta-based companies have been forced to reduce production and cut spending during the crisis. The provincial government has been seeking a “liquidity package” from Ottawa to help oil and gas companies weather the storm.
“I know they’re working on something that’s quite significant,” Alberta’s Minister of Energy Sonya Savage told the Financial Post.
“Numbers that we’ve looked at, that the premier has looked at, is we need $20 billion to $30 billion coming into our gas sector, inclusive of the service sector and the drillers — that’s the kind of program we’re looking at if we’re going to get to the other side.”
Demand in oil has been at an all-time low as benchmark prices of West Texas Intermediate crude historically slipped into negative territory.
Vachon went on to call the price cut “an act of economic warfare by a foreign government.”
“I think I’ve measured my words very carefully. But how would you describe the current situation, when predatory pricing is looking to put out of business a portion, or a significant portion, of the North American energy industry?” said Vachon.