Alberta predicting 2026 budget surplus thanks to oil prices, Middle East war

Alberta's financial outlook is improving after the Middle East conflict increased global energy prices. The province's forecast for the 2026 budget now predicts a $2-billion surplus, a significant shift from the originally expected $9.4-billion deficit. This turnaround comes after the United States-Iran conflict disrupted oil shipment through the Strait of Hormuz, causing the price of West Texas Intermediate (WTI) crude oil to average $88 per barrel since April.

For every dollar increase in the WTI price, Alberta's treasury could gain $680 million. Finance Minister Jason Nixon welcomed the quarterly windfall but cautioned that energy prices and trade uncertainties could quickly alter the forecast. Nixon emphasized that the government will not use temporary revenues to fund permanent expenses.

However, the same rising prices are also contributing to increased living costs. In response, Premier Danielle Smith announced $100 fuel tax rebate cheques for most Albertans instead of reducing the gasoline tax. Nixon hinted at the possibility of further relief measures for residents, including counter-tariffs amid the ongoing trade dispute between Canada and the United States.

For the current budget to reach the projected surplus, WTI would need to average $73.50 per barrel over the next year or $65 for the remainder of 2026. The government's delayed 2025-26 financial results are expected to more than offset the $4.1-billion deficit projected for that year. Nixon expressed confidence that the United Conservative Party (UCP) government will also report a surplus for 2026.