With Iran blocking a vital oil artery, can Canada fill the gap in global supply?
As oil and gas exports have been disrupted by the war in Iran From the Bay Area, a surge in demand for the Canadian energy sector can be seen — and federal officials are positioning Canada as a symbol of stability during an unprecedented moment.
Energy prices have surged after the US and Israel launched a joint attack on Iran on Saturday. Iran has warned tankers not to pass through the Strait of Hormuz. a vital artery For one-fifth of the world’s oil. Meanwhile, many energy companies have stopped Gulf operations after their facilities caught up in the crossfire, and it is It is not clear how long the conflict will continue.
Enter Canadian oil and gas, which doesn’t go through the Middle East strong environmental regulations It is closer to Europe than to non-democratic oil producers Qatar and Russia, and to energy giants such as the United States and Venezuela. Under US control.
With the Iran war threatening to divert most of the world’s oil and gas supplies from the Gulf, experts say there could be a big increase in demand for Canadian energy products, but Canada’s limited ability to get products to market could be a hindrance.
“We heard earlier this weekend that the world wants more Canada,” Energy and Natural Resources Minister Tim Hodgson said during a global mining conference in Toronto this week.
“Our allies around the world look to Canada as a stable, reliable, predictable, value-based producer of energy and critical minerals in a world where there are very few countries that meet all those criteria.”
It’s less certain whether Canada currently has the capacity to meet that demand, according to experts and stakeholders who spoke to CBC News.
Canada’s energy sector can fill the gap “to some extent,” said Tristan Goodman, president and CEO of the Explorers and Producers Association of Canada (EPAC). “Can it in any way make a large or significantly meaningful contribution to what is being lost? The answer is no, it cannot today.”
canadian potential
It shouldn’t be surprising that countries are knocking on Canada’s door for oil and gas, according to Renaud Brossard, vice-president of the Montreal Economic Institute, who lists Poland, Germany, Japan, South Korea and India as current and potential customers. Canada’s energy sector.
The US has long been the primary buyer of Canadian oil and gas, but recent Statistics Canada data signal a changewith canada being supplied A record share of oil went to non-US countries last November.
Now with the price of crude oil Hovering around $80 US per barrel – a figure which is still historically low But depending on the duration of the conflict, it could increase – European and Asian buyers may be looking to diversify their oil and gas supplies or add redundancies.
“The issue we have right now is really that we lack the infrastructure to get the resources we need to those markets,” Brossard said.
When operating at 100 per cent capacity, the Trans Mountain Expansion can ship approximately 890,000 barrels of oil per day from Edmonton to Burnaby for transportation to Pacific Rim countries. More expansion planned. Last time, it was working At 80 to 85 percent capacity.
and a newly operational LNG plant in Kitimat, BC, serving Japan, Korea and Malaysia has the capacity to 14 million tonnes per year.
Energy investment projects proposed in Quebec’s Baie-Comeau and approved in Newfoundland’s Bay du Nord could eventually serve Europe—and recently Memorandum of understanding The idea of a new pipeline between Alberta and Ottawa was floated.
But expanding capacity on Canada’s existing infrastructure will not be enough to meaningfully fill the gap. Zero 20 million barrels per day According to EPAC’s Goodman, further proposed projects could take years to complete due to the war in Iran.
“There are some small things that can certainly be considered by individual companies and governments that can support increased production to fill that void. But in the long term, you need to build quite large pieces of infrastructure,” he said.
Will Canadian oil demand be able to meet energy demand as conflict continues in the Middle East?
Russia may emerge as a secret supplier
The EU abandoned natural gas exports to Russia in response to the invasion of Ukraine, turning instead to Norwegian gas producers – a sore point for those in the Canadian industry who felt it was very recent example Canada missed its chance to stake its claim as a reliable energy alternative to Europe.
But regulators in Norway expect the country decline in lng production Towards 2030, opening a vacancy for another supplier to European countries.
And there remain concerns that Russia could take advantage of war And will emerge as a hidden horse to bridge the gap in global energy needs.
“Leaving Russia out of the mix is a luxury,” said Heather Exner-Pirot, director of energy, natural resources and the environment at the Macdonald-Laurier Institute. He said Europe, Japan and South Korea are among those that have sought alternatives to Russian energy.
Still, he cautioned, “In a situation where you have this Iran conflict and you’re looking at 20 percent of global supplies being affected, when the pressure increases, you’ll start to see countries … importing some Russian supplies,” even if they turn their noses up to do so.
Since December, Russia’s oil exports have risen from US$40 a barrel to about $62 due to fears of conflict in the Gulf region.
The country’s energy industry has largely funded its fight against Ukraine, and now its crude oil selling at higher benchmarks than initially forecast in its 2026 fiscal budget – making it more profitable for Russia, and still more affordable for customers relative to the international standard.
“This shows that if people don’t have choices, at the end of the day, the most affordable energy supplier will win out in a high-price environment,” Exner-Pirot said.
“As a Canadian I would say it’s our responsibility to make sure our allies have a choice between Russia and us, and that we make our product available so they don’t have to resort to Russian supplies.”
Trump said this he will deploy naval ships to accompany oil tankers through the Strait of Hormuz, and the U.S. government will offer insurance as some marine insurers cancel war-related coverage plans.
while some have questioned that planExner-Pirot says limiting disruptions to the strait is in the best interests of all players involved.
“I think there will be an effort to make sure that oil and LNG can start flowing, because nobody wants to see $90 or $100 a barrel,” he said. “It will be a shock. It will be very bad for everyone.”
