Alberta’s finance minister was discussing his new budget with Calgary’s business community Friday when he was asked what he hoped the financial discussion would focus on in a year’s time.

“Why did you sandbag oil at 60 bucks when it’s sitting at $98,” Nate Horner told the Calgary Chamber of Commerce audience in jest.

Much of Horner’s lunch-hour talk focused on Alberta’s $9.4-billion deficit forecast, based on benchmark U.S. oil prices averaging US$60.50 a barrel for the upcoming fiscal year.

However, the forecast may soon be out of date, highlighting how geopolitical volatility can quickly reshape global energy markets, and alter Alberta’s financial situation.

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Air strikes on Iran by U.S. and Israeli forces over the weekend, and attacks by Tehran against nearby Gulf States, have pushed global oil and LNG prices higher as markets weigh the potential disruption to energy shipped through the Strait of Hormuz.

The strait is the gateway to and from the Persian Gulf. More than 20 million barrels of oil and products transit each day through it, along with an estimated 20 per cent of liquefied natural gas supplies, according to S&P Global Energy.

Prices for West Texas Intermediate (WTI) crude, which started the year at US$57 a barrel, were already climbing in recent weeks as the potential for conflict in the region escalated. On Monday, WTI crude for April delivery jumped $4.21 a barrel, closing at $71.23.

That’s more than $10-a-barrel above Alberta’s forecast oil price for the budget year that begins April 1.

“That is out the window right........

© Calgary Herald