Spike in oil prices could bolster Alberta finances, but questions surround future: analysts

As conflict continues in the Middle East, soaring oil prices have left many wondering what’s next for Alberta’s resource-heavy economy.

West Texas Intermediate (WTI) crude, the benchmark for oil prices in North America, rose above $90 Friday morning and ended the day at just over $91 — a dramatic increase from before the U.S. and Israel launched an attack on Iran last weekend.

ATB Financial’s chief economist Mark Parsons says those prices could lead to short-term revenue increases in Alberta, but the longer term impact remains to be seen.

“I don't think producers are going to suddenly change their budgets based on what's happened in the last week,” he said. “We need to see this continue for a little bit longer.”

The province is operating on a $4.1-billion deficit in the current fiscal year, while Budget 2026 forecasts a $9.4-billion deficit for the fiscal year ahead. 

The latest budget, which covers the fiscal year beginning this April, forecasts WTI crude at $60.50 US per barrel, while the current fiscal year ending on March 31 was based on an average of $61.50.

“The province is relying on a very volatile revenue base, and it can easily go the other way,” Parson said.

“The question for the Alberta government is how much can they bank on this revenue to meet ongoing spending needs caused by population growth like schools, hospitals, road infrastructure. So that problem hasn't gone away."

Speaking to reporters Friday, Minister of Transportation and Economic Corridors Devin Dreeshen said “we’ll see what happens” when asked what oil prices could mean for Budget 2026 and projects going forward.

“Obviously, from a budgeting standpoint, it does have to extend throughout the entire year to make a big difference,” he said, not addressing any specific projects.

Parsons said the higher oil prices would lead to “an uplift in revenues in the energy producing provinces of Alberta, Saskatchewan, Newfoundland. In the provinces that don't produce energy, it's mostly higher costs … what you're going to see is uneven impacts across the country.”

The price of Western Canadian Select, Canadian oil traded at a discount to WTI, could also benefit due to a potential shortage of heavy crude coming from the Middle East, Parsons said.

It’s unclear how much higher crude prices could get, but some experts have bold projections: oil market analyst Rory Johnston took to social media Friday to forecast WTI prices reaching upwards of $200 US per barrel unless traffic through the Strait of Hormuz resumes.

The strait is a narrow passage between Iran and Oman through which one-fifth of the world’s crude oil travels. Oil tanker traffic there has plummeted since the conflict began.