Canada and other commodity powerhouses can help replace key exports as Western sanctions over the invasion of Ukraine isolate Russia’s economy and reduce global supplies of everything from gas to lumber, according to National Bank of Canada economists.

“If, as seems increasingly likely, more nations look askance at Russia longer term, preferring more secure, sustainable, predictable trading partners, there’s a clear opportunity for resource-rich nations like Canada to step into Russia’s shoes,” Warren Lovely and Alpa Atha wrote in a Monday note.

The two economists, writing as global commodity prices surged following Russian President Vladimir Putin’s order to invade Ukraine, noted the close similarities between Canadian and Russia export baskets. Both countries are key exporters of crude oil, natural gas, aluminum, lumber, wheat, iron and gold. 

'PARIAH NATION'

And prices for many of these commodities are surging as wave after wave of sanctions designed to halt Russia’s widely-condemned invasion choke off the global supply.

“No one in Canada is cheering the situation in Europe. Recession risks are rising, perhaps appreciably,” the two analysts said. “But despite the unfolding tragedy, there are significant near-term implications for Canadian trade, equities, currency and credit markets, alongside a longer-term opportunity to stand-in for what could become a pariah nation.”

However, there’s little Canada can do in the short term to increase supplies of oil and gas to Europe because it does not have the necessary pipeline infrastructure to its coasts, Environment Minister Stephen Guilbeault said in an interview with Bloomberg News last week.