Tuesday’s Keystone pipeline spill resulted in roughly 3,500 barrels of crude oil being released in North Dakota.
While that might not sound like much, the issue has halted the flow of millions of gallons of crude oil on the way from Canada to U.S. refineries. The $5.2 billion pipeline transported an average of 624,000 barrels, roughly 26 million gallons, in 2024.
Here’s the rub — refineries keep a supply of crude on hand — but if the shutdown continues for a couple of more days, gas, and diesel in particular, as well as jet fuel, which rely on heavy crude, could see a spike in price.
While the knock-on effects of the Keystone pipeline spill certainly deserve consideration, one particular equity is at much more immediate risk. South Bow Corp stock (NYSE: SOBO) was trading at $21.91 at press time on April 9, having lost 15.27% in value since the April 2 tariffs. The Canadian oil company’s shares could slide below $20 in the near term.
Keystone pipeline spill is just the latest challenge SOBO faces
First, let’s state the obvious — South Bow Corp, which spun off of TC Energy Corp (NYSE: TRP), owns and operates the Keystone pipeline.
Beyond this newest negative catalyst, as Canada retaliates against U.S. tariffs, the odds of Trump imposing higher duties on Canadian oil, which has notably faced reduced, 10% tariffs thus far, only increase as time goes on.
Moreover, as the sitting President’s stance on domestic energy production — ‘drill, baby, drill’ gathers momentum, SOBO stock faces yet another headwind. We also have a reference point. An earlier Keystone pipeline spill in 2022, roughly four times the size of the newer one, was estimated to have incurred a cost of $480 million.
Lastly, despite an earnings beat in the company’s Q4 2024 earnings call, the oil business issued weak guidance, so the situation was less than ideal even before the latest round of challenges.
So, how likely is a crash below $20? It would require prices to move 8.7% to the downside — which, although significant, seems quite plausible at the moment.
Featured image via Shutterstock
