UBS on Monday said the 10% tariff being imposed on Canadian energy imports could increase the price discount, or differential, on Western Canada Select (WCS) and synthetic crude oil (SCO) from oil-sands producers, a list includes Cenovus Energy (CVE.TO), Suncor Energy (SU.TO), Canadian Natural Resources (CNQ.TO)and Imperial Oil (IMO.TO).

"We view this announcement as negative for the sector and it could lead to wider WCS and SCO discounts in Canada. Off the 850mb/d of blended bitumen CVE sells, ~250mb/d is priced at Hardisty. CVE has 145mb/d capacity on TMX which may allow it hit the other export markets and avoid tariffs. However, ~300mb/d of its blended bitumen is used in its PADD 2 refining system and this will be impacted by the tariffs putting more downward pressure on a business in which the company has struggled. We estimate every $1/bbl weaker WCS relative to WTI could be a C$80M headwind for the company. Every $0.01 weaker CAD could be C$160M tailwind for the company. SU's best in class refining business could help offset some direct impact of weaker upstream price realization. Weaker AECO pricing would result in lower operating expenses for both upstream and refining businesses. IMO's upstream business will be impacted as weaker WCS pricing (Kearl and Cold Lake) in Hardisty will be headwind, however, a wider SCO spread will be a major earnings tailwind for its refining business. Weaker (natural gas) and weaker CAD to also be tailwinds for IMO. Starting Dec 1, 2024, CNQ increased capacity on TMX from 75mb/d to 169mb/d which would allow them to move crude to other locations. Thermal realizations (~265mb/d) will be impacted by wider WCS diffs while Oil Sands Mining and upgrade (~585mb/d post recent swap) will be impacted by wider SCO spreads. CNQ is Canada's top nat gas producer (~2.45Bcf/d) and does not have any refining operations to offset impact of wider diffs," the investment bank noted.