Can Canada’s energy sector help offset the effects of the Iran conflict? – Nationally
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 to the economy.
But experts say the challenge is that Canada’s current infrastructure and assets may not be able to meet this immediate demand.
“This is a really critical point [Canada] if we have the resources, we can produce more oil and gas for that matter, but even so our ability to deliver to the right markets is limited,” said Other Baron, distinguished professor of Operations Management at the Rotman School of Management.
Iran has successfully closed the critical Strait of Hormuz in the Persian Gulf region by threatening almost all ships trying to pass through it, including oil tankers.
About 20 percent of the world’s oil passes through the Strait of Hormuz, and Canada is also rich in energy resources, including crude oil and natural gas.
The US is the world’s leading producer of crude oil, responsible for 22 percent of the total supply, while Saudi Arabia and Russia are second and third, respectively, and each contribute about 11 percent of the world’s oil, according to the US Energy Information Administration, or EIA.
Canada is the world’s fourth largest producer of crude oil at six percent. But the Iran conflict could mean that number could rise.
The Canadian dollar has seen some ups and downs but has remained stable during the conflict, as of press time, and is hovering around 73.02 cents US as of press time.
Oil prices have also risen since the conflict began, with the price rising to US$75 as of press time, up from less than $64 last week.
“With the Strait of Hormuz effectively closed, investors are selling funds from regions that import most of their energy needs,” said Karl Schamotta, a market strategist at Corpay, in a letter written to Global News.
“The United States and Canada are the ones who export oil and gas to other countries, which means they will benefit economically if [oil] prices stay high for a long time.”
At the same time, the US dollar has been rising as a result of the Iran conflict.
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“The countries that export electricity are becoming more and more powerful in the current situation,” said Baron.
“We [Canadians] you will pay for it at the pump because oil prices are high, but as the Canadian economy, and in particular, the Alberta economy, may find itself stronger. The loonie may be a little stronger. So all in all, that might be helpful for us.“
Canada sees uptick in LNG inquiries
Before the current Iran conflict, the trade war triggered by US President Donald Trump’s tariff policies gave Canada and other countries pause to reassess their trade relations.
Prime Minister Mark Carney’s 2025 budget includes billions of dollars in spending aimed at growing Canada’s economy, including supporting and expanding Canada’s energy resources, transportation and shipping sectors to help meet growing global demand and be able to deliver products to customers beyond the US.
It will likely take several years for these measures to bring meaningful results to the Canadian economy, but the Iran conflict means that some customers are looking for those services more quickly.
In Qatar, the energy regulator said it has suspended LNG production amid the Iran dispute. About 20 percent of the world’s LNG supply passes through the Strait of Hormuz, mostly from Qatar, according to the EIA.
Canada has already seen an increase in foreign requests for its energy resources after the Iran conflict.
Global News sent a request to the office of Energy Minister Tim Hodgson on Wednesday asking if Ottawa has received any other calls for Canadian energy services since the Iran conflict began on Saturday.
“Yes, we can confirm that the Minister has been receiving calls from countries interested in exporting electricity to Canada,” said the minister’s press secretary in a written response.
“Unfortunately, we cannot disclose which or how many countries they have reached.”
Canada’s first international LNG shipment was launched last summer, and more have flown since then. But there may not be enough LNG or cargo ships available in the short term to meet the sudden surge in demand.
Baron says the issue is not whether Canada has enough resources available, but if Canada’s current infrastructure and logistics will allow domestic producers to get those resources to market quickly enough.
“We can benefit from it [the Iran conflict]especially since growing up [oil and gas] prices, but this is much more limited than one would imagine without the limits of refining oil and sending it to places that are in great demand now,” said Baron.
“Creating infrastructure is a decades-long process, right? This is not something you do in a few months.”
Baron says Canada may be able to meet some of the demand in the short term by mobilizing more container ships to ship available supplies – such as those currently avoiding the dangerous Strait of Hormuz.
However, it may not be a sustainable solution.
“Bringing in another ship, right? those are things you can easily do in a few months, but creating the right infrastructure to sustain, say, the export of large amounts of energy between Canada and Japan or China, that’s something that takes decades,” he said.
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