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CALGARY – All of Canada’s largest oil companies are underwater at current oil prices, oilfield service providers are laying off staff as they struggle to pay their debts and a new report argues the industry “has never faced a greater threat to its existence than it does right now.”

With the price of Western Canada Select heavy oil trading at US$8.90 per barrel on Tuesday, oil producers such as Suncor Energy Inc. and oilfield services companies including Precision Drilling Corp. have started making additional deep spending cuts. Precision also signalled new layoffs are coming as the industry tries to survive both a drop in global oil demand induced by the coronavirus pandemic and an oil price war.

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The dual threat of anaemic oil demand and surging oil supply from Saudi Arabia and Russia presents a challenge to the Canadian industry that is greater than either the oil price crash of 2014 or the National Energy Program of the 1980s, said University of Calgary School of Public Policy fellow Richard Masson in an interview with the Financial Post.