Wildfires Slash Canadian Oil Output by 7 Percent

Wildfires spread across the prairies

As of Monday (June 2), Alberta was battling 49 active fires, 26 of which were classified as "out of control." Saskatchewan and Manitoba, also grappling with the early wildfire season, reported 16 and 24 active fires, respectively.

Environment Canada forecasts show little immediate relief, with temperatures hovering in the high teens to low 20s Celsius and limited rainfall expected until the weekend.

Alberta Premier Danielle Smith announced that the province is reactivating its emergency management cabinet committee in anticipation of worsening conditions.

“We've got to be able to respond in a way that is going to be rapid,” she told reporters.

The Canadian Interagency Forest Fire Center reported that, as of Sunday, more than 1.4 million hectares had burned nationwide this year. The impact of the fires has been widespread — last week, Manitoba authorities urged around 17,000 residents in the remote north to evacuate due to escalating fire risk.

Global oil markets feel the heat

Alberta's oil production loss, which is nearly equivalent to the amount of crude that OPEC+ recently agreed to reintroduce to the global market, is resonating beyond Canada’s borders.

With US sanctions restricting Venezuelan heavy crude exports and seasonal maintenance already curbing Alberta's supply, the sudden production drop tightens an already constrained market for heavier oil grades.

While the physical damage to facilities so far appears minimal, the proximity of active fires to pipeline corridors and steam-assisted gravity drainage projects remains a concern.

Early on Monday, wildfires had advanced to within 10 kilometers of sites producing nearly 470,000 bpd.

Beyond oil production, the fires are impacting air quality across North America.

In parts of Minnesota and North Dakota, the US Environmental Protection Agency reported “unhealthy” air levels on Monday due to smoke drifting south from Canadian wildfires.

This mirrors conditions from last year, when Canadian blazes blanketed major US cities in smoke for weeks.

A pattern of risk

Canada's energy sector has frequently been disrupted by wildfires.

In 2023, more than 100 wildfires in Alberta forced operators to shut down at least 319,000 barrels of oil equivalent per day — roughly 3.7 percent of national production. The 2016 Fort McMurray fire, the most severe in Canadian energy history, shut down over 1 million bpd and displaced tens of thousands.

While the 2025 fire season is still in its early stages, experts worry that the escalating pace and scale of the blazes together signal a structural shift driven by climate conditions.

Alberta’s firefighting crews remain deployed across dozens of burn sites, supported by federal and interprovincial reinforcements. Environment Canada expects a brief reprieve from dry weather mid-week, with showers possible by the weekend. Still, officials warn that conditions could remain volatile for weeks.