Saudioilimportseasy toreplace:economist

Canada can easily replace the oil it imports from Saudi Arabia should relations with the Middle Eastern kingdom deteriorate to the point that trade in crude is halted, says an energy economist.

But this week’s trade tension escalation means Canada will be on the sidelines as the Saudis try to diversify their economy away from its dependence on oil and gas, said Omar Allam, a Canadian consultant who specializes in advice on doing business in Saudi Arabia.

Eastern Canadian refineries import about 75,000 to 80,000 barrels per day of Saudi Arabian crude, said Judith Dwarkin, chief economist with RS Energy Group in Calgary, on Tuesday.

That’s less than 10 per cent of total imports and amounts to a “drop in the bucket” compared with the United States, she said, which accounts for two-thirds of imports and could easily cover Saudi’s share thanks to growing domestic production.

It is also dwarfed by the 3.5 million barrels per day of Canadian oil that Canada exports mainly to the U.S.

“The Saudis, if they choose to supply less to Canada, will divert those barrels, possibly to China, and U.S. barrels that would have gone to China, but are uncompetitive under Chinese tariffs, come to Canada,” Dwarkin said.

“Basically, the cupboard gets rearranged.”

Saudi Arabia declared a freeze on new trade with Canada and recalled thousands of students attending Canadian universities following a tweet last week from Global Affairs Canada that expressed concerns about the arrest of activists in the kingdom.

The Saudi foreign ministry has also ordered Canada’s ambassador, Dennis Horak, to leave the country.

“A rise in tensions puts Canadian bids to win major healthcare projects, education projects, transportation projects, on an increasingly shaky footing,” said Allam, a former Canadian diplomat and head of Allam Advisory Group.