Thirty days into the U.S.-Israel air campaign against Iran, the closure of the Strait of Hormuz has triggered the largest oil supply disruption in market history, collapsing flows from roughly 20 million barrels per day to a trickle. For Canada, the sectoral impacts are asymmetric: the prospect of significant near-term opportunities tempered by structural bottlenecks and longer-term uncertainty.
Oil
Canada’s position as the world’s fourth-largest crude producer makes this the country’s most consequential opportunity. With Gulf output down by at least 10 million barrels per day, benchmark prices have surged, and Canadian heavy crude spreads have tightened significantly. The medium-term outlook is more nuanced: the Trans Mountain Expansion is the primary relief valve for Pacific-bound exports, but infrastructure constraints limit how quickly Canada can ramp up volumes to replace disrupted Middle Eastern supply. Political pressure to accelerate pipeline approvals is intensifying, yet new capacity remains years away.
Natural Gas and LNG
Before the conflict, approximately 20 per cent of global LNG trade passed through the Strait of Hormuz. That supply has effectively vanished, pushing Asian spot prices sharply higher and focusing international attention on Canada’s Pacific-facing capacity. LNG Canada Phase 1, online since 2025, is operating at full capacity and commanding premium pricing. The crisis is also accelerating final investment decisions on Phase 2 and Ksi Lisims, which together could add more than 40 million tonnes per year by the early 2030s. Canada is increasingly well-positioned as a structural supplier for Asian buyers seeking alternatives to Middle Eastern LNG
Aluminum
The Gulf states account for roughly 8 per cent of global primary aluminum output, and Iran’s retaliatory strikes have now directly affected key production infrastructure. Emirates Global Aluminium, responsible for approximately 4 per cent of world supply, sustained significant damage on March 28, while Aluminium Bahrain, home to one of the world’s largest smelters, was targeted the same day. Several Gulf producers had already declared force majeure. J.P. Morgan has flagged aluminum as a primary commodity upside risk, noting that the physical infrastructure damage is not yet fully reflected in futures prices.
Canada’s ability to capitalize, however, is significantly constrained by trade dynamics. The U.S. Section 232 tariff, doubled to 50 percent in June 2025, forced a substantial diversion of Quebec smelter output toward Europe. Now, with U.S. Midwest premiums up 82 per cent and Gulf supply physically impaired, Canadian producers are looking to expand exports to the U.S. despite the tariff burden. While Canada’s hydroelectric cost advantage is real, its ability to fully monetize the current disruption remains limited.
Fertilizer
Since hostilities began, urea and ammonia prices have surged 50 per cent and 20 per cent, respectively, with Egypt FOB urea jumping from approximately $450 to $700 per metric tonne following Iran’s effective removal from global nitrogen markets. Canada’s nitrogen exposure is limited, but its potash sector, accounting for roughly 30 per cent of global capacity, stands to benefit from the broader fertilizer price surge as global food security concerns intensify. Saskatchewan producers are positioned to capture elevated margins through at least the 2026 planting season.
Helium
Qatar produces approximately 30 per cent of global helium, and regional conflict risk has driven prices sharply higher as semiconductor manufacturers and medical imaging operators scramble to secure long-term supply. Saskatchewan’s emerging helium sector is now attracting accelerated interest from chip manufacturers seeking non-Middle Eastern alternatives. The medium-term investment case for Canadian helium development has been materially strengthened by the conflict. Challenges remain, however: Canada lacks liquefaction facilities, dedicated pipeline infrastructure, and large-scale storage capacity.
Across all five sectors, Canada’s fundamental challenge is the same: abundant resources paired with constrained or tariff-encumbered export infrastructure. The conflict has compressed the timeline for difficult investment and policy decisions that Ottawa has long deferred.
Housing Affordability Watch
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When oil prices spike, the effects ripple through bond markets — and eventually into mortgage rates.
In our latest Housing Affordability Watch, we look at how the recent oil price shock is influencing bond yields and what that means for Canadians facing mortgage renewals in 2026.
Read the full analysis: Oil Price Shock, Bond Market Volatility, and Canadian Housing Affordability
Sources
Iran War: General
Oil and Energy
Aluminum
- Mideast Aluminum Makers Suffer Damage From Iranian Attacks | Bloomberg
- Bahrain aluminum giant says Iranian attack targeted its facility | CNBC
- Aluminium prices expected to rise with prolonged war | The National
- US–Israel Military Operation Against Iran: Are Markets on Edge? | J.P. Morgan
- Canada Aluminum Hub Diverts Exports to Europe as US Tariffs Bite | Bloomberg
- Canadian Aluminum Exports Rebound to US as Tariffs Drive Up Prices | Chamber of Shipping
Fertilizer
- Fertilizer prices surge amid Iran war, sparking food security warnings | CNBC
- The war in Iran sparks a global fertilizer shortage | Canada’s National Observer
Helium
- Iran war disrupts helium supply, threatening chip supply chain | The Hill
- The Iran war is threatening supply of helium | CNBC
- Helium hitch: Why the war on Iran could cause MRI scan delays | Al Jazeera
Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any person or organization in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice including investment advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication. Readers are cautioned to always seek independent professional advice from a qualified professional before making any investment decisions.
