Trade tensions around the world are escalating — for proof, look no farther than the current situation taking place between Canada and Saudi Arabia on a global stage. Recently, Saudi Arabia made headlines when it both expelled a Canadian ambassador and ceased new trade and investments with the United States’ neighbor to the north. But a lot of experts agree that this particular rift may be decidedly one-sided — Canada itself feels that Saudi crude oil is easily replaceable moving forward.
Saudi Crude Oil and Canada: What You Need to Know
According to a number of sources, Canada can easily replace the oil it imports from Saudi Arabia should its relationship with the latter country get to the point where all trade in Saudi crude oil is stopped. To put that into perspective, Canadian refineries currently import anywhere between 75,000 and 80,000 barrels of crude oil per day.
While that may sound like a lot, it actually isn’t — comparatively speaking. That number represents only about 10% of Canada’s total imports. It’s unimpressive when you consider that Canada’s relationship with the U.S. amounts for about 75% of its imports.
Potential Effects of Trade Rift
Energy economists predict that if Saudi Arabia chooses to supply less to Canada, those barrels would instead be diverted to other nations — including China. Barrels from the U.S. that would have gone to China but that are increasingly uncompetitive due to the recent tariffs will then go to places like Canada.
These actions have only raised tensions between the two nations, not reduced them. Somewhere between 12,000 and 15,000 Saudi students were recently recalled from Canada, for example, along with all of their accompanying relatives. That alone could remove roughly $2 billion in annual investment to Canada’s economy. Saudi Arabia’s state airline has canceled flights to and from Canada.
One thing is sure: this is a situation that is only going to get worse before it gets better. Canadians, Saudi Arabians and others around the world will pay close attention as things unfold over the next several months.