As the Iran conflict threatens global oil and gas supplies, Canada’s energy and resources sector may be able to offset some of these impacts and see benefits for the economy.
But experts say Canada’s current infrastructure and logistics may not be able to meet this sudden surge in demand.
“It’s a really critical point. We (Canada) have the resources, we can produce a lot of oil and gas, but our ability to get it to the right markets is limited,” says Ofer Baron, distinguished professor of operations management at the Rotman School of Management.
Iran has effectively closed the Strait of Hormuz in the Persian Gulf region, threatening all ships that attempt to pass through the narrow chokepoint, including oil tankers.
About 20 percent of the world’s oil supply passes through the Strait of Hormuz, and Canada is rich in energy resources, including crude oil and natural gas.
According to the US Energy Information Administration, or EIA, the US is the top producer of crude oil globally, responsible for 22 percent of total supply, while Saudi Arabia and Russia are second and third, respectively, and each contribute about 11 percent of the world’s oil.
Canada is the fourth largest contributor of crude oil in the world, at six percent. But the Iran conflict means that number could rise.
The Canadian dollar has seen some fluctuations but has remained largely stable during the conflict as of press time, hovering around 73.02 US cents at press time.
Oil prices have soared since the conflict began, hovering around US$75 as of publication and as low as $64 last week.
“With the Strait of Hormuz effectively closed, investors are selling currencies from regions that import most of their energy needs,” says Carl Shammotta, chief market strategist at Carpay, in a written note to Global News.
“Both the United States and Canada are net exporters of oil and gas, which means they will benefit economically if (oil) prices remain high for a long period of time.”
At the same time, the US dollar is rising as a knock-on effect of the Iran conflict.
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“The energy exporting countries are becoming stronger in the current situation,” says Barron.
“We (Canadians) will pay for it at the pump because oil prices are higher, but the Canadian economy, and Alberta’s economy in particular, may be strengthening itself. The loonie may be a little bit stronger. So overall that could be beneficial for us.”“
Canada will see an increase in LNG demand
Before the current Iran conflict, the trade war caused by US President Donald Trump’s tariff policies gave Canada and other countries pause to reassess their trade relationships.
Prime Minister Mark Carney’s Budget 2025 includes billions of dollars in spending aimed at growing Canada’s economy, including supporting and expanding Canada’s energy resources, logistics and shipping sectors to meet global demand and deliver products to consumers beyond the US.
These measures will take several years to produce meaningful results for the Canadian economy, but the Iran conflict means some consumers want those resources more quickly.
In Qatar, the energy regulator said it had suspended LNG production amid the Iran conflict. According to the EIA, about 20 percent of the global supply of LNG passes through the Strait of Hormuz, primarily from Qatar.
Canada has already seen an increase in requests from other countries for its energy resources in the wake of the Iran conflict.
Global News sent a request to Energy Minister Tim Hodgson’s office on Wednesday asking if Ottawa has been receiving more calls to Canada’s energy resources since the Iran conflict began on Saturday.
“Yes, we can confirm that the minister is receiving calls from countries interested in Canadian energy exports,” the minister’s press secretary said in a written response.
“Unfortunately, we are unable to disclose which or how many countries have been reached.”
Canada’s first international shipment of LNG was launched last summer, with more shipments to follow. But there may not be enough LNG or cargo ships available in the short term to meet a sudden surge in demand.
Baron says the issue isn’t whether there are enough resources available in Canada, but that Canada’s current infrastructure and logistics allow domestic producers to bring those resources to market fairly quickly.
“We can benefit from it (the Iran conflict), especially from rising (oil and gas) prices, but it’s fundamentally more limited than one might think without the logistical constraints of refining oil and transporting it to places where it’s now in dire need,” Barron says.
“Creating infrastructure is a decades-long project, right? It’s not something you do in a couple of months.”
Baron says Canada may be able to meet some of the demand in the short term by stockpiling more container ships to export available resources — such as avoiding the current Strait of Hormuz.
However, this is not a sustainable solution.
“Bringing in another ship, right? Things you can do relatively easily in terms of months, but creating the right infrastructure to sustain enough energy transport between Canada and Japan or China, that takes decades,” he says.
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