Alberta’s Imperial Oil Ltd. is seizing the opportunity presented by elevated diesel and jet fuel prices by ramping up production of these critical products at its refineries. Scott Maloney, the company’s vice-president of downstream operations, revealed during a conference call with analysts that the firm is prioritising the output of diesel and jet fuel over gasoline in response to market conditions.
Refineries Respond to Market Demand
Imperial operates two refineries in southwestern Ontario and one in Edmonton, primarily supplying the Canadian market. However, Maloney noted that the company is also looking to export excess production when opportunities arise. The ongoing conflict in the Middle East has severely disrupted oil shipments from the Persian Gulf, significantly increasing prices and creating shortages for fuel products in certain regions.
Natural Resources Canada has reported that the average weekly price for diesel is currently hovering around $2.21 per litre, which is substantially higher than the levels seen in late February. This rise in costs is impacting long-haul truck operators, rail services, and the businesses reliant on them, with many imposing fuel surcharges to cope with the increased expense.
Airlines Face Jet Fuel Price Surge
In addition to land transport, the airline industry is grappling with soaring jet fuel prices. Air Canada recently suspended its financial guidance for the year, citing the volatility in fuel costs as a major concern. Globally, airlines have started to reduce their flight schedules, as the ballooning cost of fuel is making certain routes financially unviable.
During the first quarter of the year, which included a month impacted by the Middle East turmoil, Imperial sold an average of 169,000 barrels per day of heating oil, diesel, and jet fuels. This figure is slightly down from the 175,000 barrels sold during the same period last year. The throughput at Imperial’s refineries averaged 384,000 barrels per day, a decrease from 397,000 barrels per day in the previous year.
Production Levels and Financial Performance
Despite the challenges, Imperial’s Kearl oilsands operation north of Fort McMurray managed to slightly increase its output to 259,000 barrels of bitumen per day, even in the face of a natural gas supply outage. Overall, upstream production averaged 419,000 gross oil-equivalent barrels per day, which is a marginal increase from the 418,000 in the first quarter of 2025.
On the financial front, Imperial reported a first-quarter profit of $940 million, a decrease from the $1.29 billion recorded a year earlier. The decline was largely attributed to increased incentive compensation charges linked to the rise in the company’s share price, amounting to $143 million after tax. The profit for the quarter translated to $1.94 per diluted share, down from $2.52 per share in the same quarter of 2025. Revenue for the period reached $12.45 billion, slightly down from $12.52 billion the previous year.
The Wider Economic Impact
The current situation in the fuel market is not just a concern for Imperial Oil and its operations but has broader implications for the Canadian economy. The rising costs of diesel and jet fuel are straining transportation industries, potentially leading to increased prices for goods and services across various sectors. The turbulence in the airline industry could also disrupt travel plans for many Canadians, especially during peak travel seasons.
Why it Matters
The dynamics of fuel pricing and production levels are critical not only for companies like Imperial Oil but also for the overall health of the Canadian economy. As transportation costs rise, the ripple effects could lead to inflationary pressures affecting consumers and businesses alike. The ongoing geopolitical tensions further complicate this landscape, making it essential for stakeholders to closely monitor developments in fuel supply and pricing trends.
