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2025 Energy Outlook: Steering Through Recovery and Policy Shifts

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From EnergyNow.ca

By Leonard Herchen & Yuchen Wang of GLJ

Their long-term real price forecast projects WTI at USD $74.00 per barrel and Henry Hub natural gas at USD $4.00 per MMBtu in 2025 dollars, signaling expectations of market stabilization and sustained global demand.

The energy markets in 2025 are undergoing transformative structural changes, highlighted by the operational launch of key infrastructure projects such as LNG Canada. This development significantly enhances Canada’s ability to meet rising global LNG demand while alleviating long-standing supply bottlenecks. At the same time, economic recovery across major markets remains uneven, shaping varied trends in energy demand and production activity.

Geopolitical dynamics are poised to redefine the competitive landscape, with the return of a Trump-led U.S. administration introducing potential shifts in trade policies, regulatory frameworks, and relationships with leading energy-producing nations. These changes, coupled with climate policy advancements and an accelerated global transition toward renewable energy, present additional complexities for the oil and gas sector.

Amid these uncertainties, GLJ’s analysts express confidence in the resilience of market fundamentals. Their long-term real price forecast projects WTI at USD $74.00 per barrel and Henry Hub natural gas at USD $4.00 per MMBtu in 2025 dollars, signaling expectations of market stabilization and sustained global demand.

Oil Prices

The oil market in 2025 reflects a delicate balance between supply and demand. During Q4 2024, WTI prices remained stable, fluctuating between $69 and $73 per barrel. This stability highlights the market’s resilience, even in the face of a slower global economic recovery and geopolitical challenges, including weaker demand in regions like China and increased production in North America.

Geopolitical risks remain pivotal, with ongoing tensions in the Middle East and sanctions on oil-exporting nations such as Iran and Venezuela threatening supply disruptions. While OPEC+ production cuts continue to provide vital support to prices by tightening global supply, these efforts are partially offset by the rising output of non-OPEC producers, notably in the U.S. and Canada.

The Trans Mountain Expansion (TMX) project is reshaping the pricing dynamics of WCS crude relative to WTI. By increasing export capacity to the West Coast, TMX has created conditions for a sustained narrowing of the WCS-WTI differential, moving away from seasonal fluctuations.

The return of a Trump-led U.S. administration introduces additional challenges. Deregulation policies aimed at boosting domestic oil production may exert downward pressure on prices, while potential trade tariffs and revised international agreements could further complicate global oil flows.

In this dynamic environment, GLJ forecasts WTI to average $71.25 per barrel and Brent $75.25 per barrel in 2025. These projections reflect robust long-term fundamentals, including sustained global demand and ongoing efforts to manage supply dynamics, emphasizing the market’s resilience despite near-term uncertainties.

Natural Gas Prices

In 2025, GLJ’s forecast suggests Henry Hub prices will average $3.20 per MMBtu, supported by steady domestic demand, seasonal winter peaks, and robust LNG exports. U.S. natural gas continues to play a critical role globally, ensuring supply security for key markets in Europe and Asia. The combination of growing industrial use, power generation demand, and stable production levels provides a solid foundation for price stability.

For the Canadian market, GLJ projects AECO natural gas prices to average $2.05 per MMBtu in 2025, representing a recovery from the lows of 2024. This improvement is attributed to easing regional oversupply and stabilizing demand. However, challenges persist, as production continues to outpace infrastructure expansion, prompting a downward adjustment of GLJ’s long-term AECO price forecast by $0.40 per MMBtu. The ramp-up of LNG Canada’s operations is expected to progressively enhance market dynamics and address these challenges.

On a global scale, LNG benchmarks such as NBP, TTF, and JKM have remained relatively stable, supported by high storage levels in Europe and balanced supply-demand conditions. European suppliers have effectively managed storage drawdowns, ensuring sufficient reserves for winter. Nevertheless, these benchmarks remain susceptible to market volatility driven by geopolitical uncertainties.

The CAD/USD Exchange Rate

The Canadian dollar experienced sharp depreciation during the last quarter of 2024, with the CAD/USD exchange rate falling below 0.70 USD. Economists have attributed this decline to the strength of the U.S. economy and its currency, the widening gap between the Bank of Canada and the U.S. Federal Reserve’s lending rates, as well as tariff threats and a political crisis in Ottawa. These factors have created a favorable environment for the U.S. dollar, putting downward pressure on the Canadian dollar.

Looking ahead to 2025, GLJ forecasts a CAD/USD exchange rate averaging 0.705 USD, underpinned by steady oil and gas revenues and enhanced export capacity from major projects such as LNG Canada and the TMX and eventual resolution of internal political issues and return to normalcy in US tariff policy.

Nevertheless, the outlook for the Canadian dollar remains uncertain, shaped by global economic recovery—particularly in China—and U.S. policy decisions under the Trump administration. While near-term challenges persist, Canada’s resource-driven economy and strategic energy export position provide a degree of resilience. In the absence of significant economic or geopolitical disruptions, GLJ projects the CAD/USD exchange rate to stabilize around 0.75 USD over the long term.

In 2025, GLJ expanded its database to include forecasts for Colombia Vasconia and Castilla Crude, as well as lithium prices, reflecting the increasing focus on diverse energy and resource markets. The addition of lithium forecasts aligns with the growing global emphasis on energy transition minerals critical for electric vehicles and battery storage solutions. A separate blog, set to be published next week on the GLJ website, will explore the lithium price forecast in greater depth, offering a detailed analysis and strategic implications for the energy sector.


GLJ’s forecast values for key benchmarks is as follows:

 

Alberta

COWBOY UP! Pierre Poilievre Promises to Fight for Oil and Gas, a Stronger Military and the Interests of Western Canada

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Fr0m Energy Now

By Maureen McCall

As Calgarians take a break from the incessant news of tariff threat deadlines and global economic challenges to celebrate the annual Stampede, Conservative party leader Pierre Poilievre gave them even more to celebrate.

Poilievre returned to Calgary, his hometown, to outline his plan to amplify the legitimate demands of Western Canada and not only fight for oil and gas, but also fight for the interests of farmers, for low taxes, for decentralization, a stronger military and a smaller federal government.

Speaking at the annual Conservative party BBQ at Heritage Park in Calgary (a place Poilievre often visited on school trips growing up), he was reminded of the challenges his family experienced during the years when Trudeau senior was Prime Minister and the disastrous effect of his economic policies.

“I was born in ’79,” Poilievre said. “and only a few years later, Pierre Elliott Trudeau would attack our province with the National Energy Program. There are still a few that remember it. At the same time, he hammered the entire country with money printing deficits that gave us the worst inflation and interest rates in our history. Our family actually lost our home, and we had to scrimp and save and get help from extended family in order to get our little place in Shaughnessy, which my mother still lives in.”

This very personal story resonated with many in the crowd who are now experiencing an affordability crisis that leaves families struggling and young adults unable to afford their first house or condo. Poilievre said that the experience was a powerful motivator for his entry into politics. He wasted no time in proposing a solution – build alliances with other provinces with mutual interests, and he emphasized the importance of advocating for provincial needs.

“Let’s build an alliance with British Columbians who want to ship liquefied natural gas out of the Pacific Coast to Asia, and with Saskatchewanians, Newfoundlanders and Labradorians who want to develop their oil and gas and aren’t interested in having anyone in Ottawa cap how much they can produce. Let’s build alliances with Manitobans who want to ship oil in the port of Churchill… with Quebec and other provinces that want to decentralize our country and get Ottawa out of our business so that provinces and people can make their own decisions.”

Poilievre heavily criticized the federal government’s spending and policies of the last decade, including the increase in government costs, and he highlighted the negative impact of those policies on economic stability and warned of the dangers of high inflation and debt. He advocated strongly for a free-market economy, advocating for less government intervention, where businesses compete to impress customers rather than impress politicians. He also addressed the decade-long practice of blocking and then subsidizing certain industries. Poilievre referred to a famous quote from Ronald Reagan as the modus operandi of the current federal regime.

“The Government’s view of the economy could be summed up in a few short phrases. If anything moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

The practice of blocking and then subsidizing is merely a ploy to grab power, according to Poilievre, making industry far too reliant on government control.

“By blocking you from doing something and then making you ask the government to help you do it, it makes you reliant. It puts them at the center of all power, and that is their mission…a full government takeover of our economy. There’s a core difference between an economy controlled by the government and one controlled by the free market. Businesses have to clamour to please politicians and bureaucrats. In a free market (which we favour), businesses clamour to impress customers. The idea is to put people in charge of their economic lives by letting them have free exchange of work for wages, product for payment and investment for interest.”

Poilievre also said he plans to oppose any ban on gas-powered vehicles, saying, “You should be in the driver’s seat and have the freedom to decide.” This is in reference to the Trudeau-era plan to ban the sale of gas-powered cars by 2035, which the Carney government has said they have no intention to change, even though automakers are indicating that the targets cannot be met. He also intends to oppose the Industrial Carbon tax, Bill C-69 the Impact Assessment Act, Bill C-48 the Oil tanker ban, the proposed emissions cap which will cap energy production, as well as the single-use plastics ban and Bill C-11, also known as the Online Streaming Act and the proposed “Online Harms Act,” also known as Bill C-63. Poilievre closed with rallying thoughts that had a distinctive Western flavour.

“Fighting for these values is never easy. Change, as we’ve seen, is not easy. Nothing worth doing is easy… Making Alberta was hard. Making Canada, the country we love, was even harder. But we don’t back down, and we don’t run away. When things get hard, we dust ourselves off, we get back in the saddle, and we gallop forward to the fight.”

Cowboy up, Mr. Poilievre.

Maureen McCall is an energy professional who writes on issues affecting the energy industry.

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Business

Carney’s new agenda faces old Canadian problems

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From the Fraser Institute

By John Ibbitson

In his June speech announcing a major buildup of Canada’s military, Prime Minister Mark Carney repeated his belief that this country faces a “hinge moment” of the sort the allied countries confronted after the Second World War.

A better comparison might be with the beginning of the war itself.

Then, the Allies found themselves at war with an autocratic state bent on their defeat and possible destruction. Now, Carney faces an antagonistic American president bent on annexing Canada through economic warfare.

Then, Canada rose to the challenge, creating the world’s third-largest navy and landing an army at Normandy on D-Day. Now, Carney has announced the most aggressive reorienting of Canada’s economic, foreign and defence policies in generations.

Polls show strong support among Canadians for this new agenda. But the old Canada is still there. It will fight back. It may yet win.

The situation certainly would have been more encouraging had Carney not inherited Justin Trudeau’s legacy of severe economic and environmental restrictions—picking economic winners and losers rather than letting the market decide—and chronic deficits. The new prime minister would do well to dismantle as much of that legacy as he can.

Some advocate a return to the more laissez-faire approach of Stephen Harper’s government. But Harper didn’t confront a belligerent president hoping to annex Canada through the “economic force” of tariff walls.

The prime minister succeeded in getting Bill C-5, which is intended to weaken at least some of the restrictions on resource development and infrastructure, passed into law. He and the premiers pledge to finally dismantle generations of internal trade and labour mobility barriers. If we must trade less with the Americans, we can at least learn to trade with ourselves.

And the prime minister deserves high praise for reversing decades of military decline through increased spending and efforts to improve procurement. If Carney accomplishes nothing more than restoring Canada’s defences, especially in the Arctic, he will be well remembered.

That said, major challenges confront the Carney agenda.

There’s much talk about a new national energy corridor. But what does that mean? One KPMG executive defined it as a “dedicated, streamlined pathway for the energy, electricity, decarbonization, transportation and digital infrastructure.”

Yes, but what does that mean?

Whatever it means, some First Nations will oppose it tooth-and-nail. Not all of them, mind you. The First Nations Major Project Coalition is dedicated to assisting First Nations in working with government and the private sector for the benefit of all. But many First Nations people consider resource development further exploitation of their ancestral lands by a colonizing power. At the first major proposal to which they do not buy in, they will take the government to court.

What investor will be willing to commit to a project that could be blocked for years as First Nations and Ottawa fight it out all the way to the Supreme Court?

The prime minister, formerly a fervent advocate of combatting climate change, now talks about developing “conventional energy,” which means oil and gas pipelines. But environmental activists will fiercely oppose those pipelines.

There is so much that could go wrong. Sweep away those internal trade barriers? Some premiers will resist. Accelerate housing development? Some mayors will resist. Expand exports to Europe and Asia? Some businesses and entrepreneurs will say it’s not worth the risk.

As for the massive increase in defence spending, where will the money come from? What will be next year’s deficit? What will be the deficit’s impact on inflation, interest rates and sovereign creditworthiness? The obstacles are high enough to make anyone wonder how much, if any, of the government’s platform will be realized. But other factors are at work as well, factors that were also present in 1939.

To execute his mandate, Carney is surrounding himself with what, back in the Second World War, were called “dollar a year men”—executives who came to Ottawa from the private sector to mobilize the economy for wartime.

In Carney’s case he has brought in Marc-André Blanchard as chief of staff and Michael Sabia as clerk of the privy council. Both are highly experienced in government and the private sector. Both are taking very large pay cuts because, presumably, they understand the gravity of the times and believe in the prime minister’s plans.

Most important, Carney’s agenda has broad support from a public that fears for the country’s future and will have little patience toward any group seeking to block the prime minister’s agenda.

Millions of Canadians want this government’s reform efforts to succeed. Those who would put it at risk of failing will have to contend with public anger. That gives Carney a shot at making real change.

John Ibbitson

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