With a crucial oil artery blocked near Iran, can Canada fill the gap in
As the war in Iran disrupts oil and gas exports from the Gulf region, the Canadian energy sector could see a jump in demand — and federal officials are positioning Canada as a beacon of stability during an unpredictable moment.
Energy prices have soared since the U.S. and Israel launched a joint attack on Iran Saturday. Iran has warned tankers not to pass through The Strait of Hormuz, a crucial artery for a fifth of the world’s oil. Meanwhile, several energy companies have halted Gulf operations after their facilities were caught in the crossfire, and it’s unclear how long the conflict will continue.
Enter Canadian oil and gas, which doesn’t pass through the Middle East, has stronger environmental regulations than non-democratic oil producers Qatar and Russia, and is in closer proximity to Europe than energy heavyweights like the United States and Venezuela, with the latter now under U.S.-control.
With the Iran war threatening to upend much of the world’s oil and gas supply from Gulf states, experts say there could be a big uptick in demand for Canadian energy products, but Canada’s limited ability to get the products to market could be an obstacle.
“We heard previous to this weekend that the world wants more Canada,” said Energy and Natural Resources Minister Tim Hodgson during a global mining conference in Toronto this week.
“Our allies around the world see Canada as a stable, reliable, predictable, values-based producer of energy and critical minerals in a world where there are very few countries that meet all of those criteria.”
Whether Canada currently has the capacity to meet that demand is far less certain, according to experts and stakeholders who spoke with CBC News.
Canada’s energy sector can fill the gap to “a small degree,” said Tristan Goodman, president and CEO of the Explorers and Producers Association of Canada (EPAC). “Can it in any way contribute in a large or significantly meaningful way to what is being lost? The answer is no, it cannot today.”
Canada’s capacity
It shouldn’t come as a surprise that countries are knocking on Canada’s door for oil and gas, according to Renaud Brossard, vice-president at the Montreal Economic Institute, who listed Poland, Germany, Japan, South Korea and India as current and potential customers of the Canadian energy sector.
The U.S. has long been the primary buyer of Canadian oil and gas, but recent Statistics Canada figures indicate a shift, with Canada having supplied a record share of oil to non-U.S. countries last November.
With the price of crude oil now hovering around $80 US a barrel — a figure that is still historically low but could creep up, depending on the length of the conflict — European and Asian buyers may be looking to diversify or add redundancies to their oil and gas supply.
“The issue we have right now, actually, is that we lack the infrastructure to get our necessary…
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