Oil prices are surging to their highest levels in months as the U.S.-Iran conflict disrupts tanker traffic through the Strait of Hormuz, sending freight costs higher and forcing insurers to pull coverage for vessels using the route.
BNN Bloomberg spoke with Patrick O’Rourke, managing director at ATB Cormark Capital Markets, about how the disruption is tightening energy markets and why Canada’s reputation as a reliable crude supplier could become more important for global refiners.
Key Takeaways
- Oil prices are climbing sharply as shipping disruptions in the Strait of Hormuz push tanker rates higher and restrict global crude flows.
- Markets are pricing the shock mainly in near-term oil contracts, suggesting traders still expect the disruption to be temporary.
- Waterborne LNG markets appear particularly vulnerable as Europe and Asia rely heavily on seaborne shipments and maintain limited storage buffers.
- Canada’s heavy crude could gain strategic importance as refiners look for reliable supply outside conflict-prone regions.
- Canadian energy producers have improved efficiency and resilience in recent years, potentially allowing them to capture stronger margins during price spikes.
Read the full transcript below:
ANDREW: Oil spiking again this morning. It looks like we could get to $90 US for the North American benchmark at this rate — the biggest weekly percentage gain since the pandemic. The volatility back then — and this, of course — is because shipments through the Strait of Hormuz have essentially been shut as insurers are reluctant to cover vessels going through that crucial waterway.
Let’s get more from Patrick O’Rourke, managing director at ATB Cormark Capital Markets. Thanks very much for talking to us, Patrick.
PATRICK: Thanks for having me.
ANDREW: One thing that strikes me, though — we’ve seen past Middle East wars where oil went up for a bit, then dropped. Could it be different this time?
PATRICK: Well, we published a report Monday morning called Northern Pivot. One of the main takeaways is that it’s a very dynamic and volatile situation, and a lot of the things we published were speculative.
Could the duration of this be longer than initially anticipated? That’s very possible, and that’s the way it seems to be trending today. The other unknowns for us would be how much damage is actually done to production, reservoirs and oil egress through the conflict.
The third unknown would be what things look like on the other side. Do we have governments that are generally favourable to regime change in Iran that’s favourable to Western nations, or do they double down? So we’re still trying to digest all those things.
If you look at the crude tape itself, most of the movement — the extreme strength we’re seeing today — is at the front end of the forward curve. We haven’t seen quite the same move out into 2027 yet. That’s moved up probably only $5 at this point in time.
So the market would suggest today that this is going to be somewhat shorter in duration, but that duration is certainly lengthening on a day-to-day and even minute-by-minute basis.
ANDREW: And it sounds like Iran doesn’t need a big navy or anything to disrupt traffic. Even coast guard activity or isolated attacks on ships appear to be enough to deter traffic.
PATRICK: Well, tanker freight rates have gone up and insurance has become a challenge. I know the U.S. administration has said they’re going to step into that market. We’re still waiting for specific details of how that’s going to look.
So today that would be an impediment to moving a ship as well.
ANDREW: Fascinating as well — Qatar. There’s a headline on Bloomberg saying they appear to have loaded their first LNG cargo ship since declaring force majeure, warning they couldn’t get LNG to customers. But they must be extremely concerned, because they’ve pitched themselves as a reliable source of liquefied natural gas.
PATRICK: And they have ships that are sitting there boiling off LNG right now. One of the takeaways from our report was that waterborne gas markets were probably some of the most vulnerable.
You think about the situation: Europe relaxed some of its storage fill requirements for natural gas heading into this winter, so they’re sitting at five-year lows in terms of gas storage.
Then you think about the structure of Asian markets for LNG deliveries — generally much lower storage capabilities that rely on just-in-time shipments. So that’s probably the most vulnerable market right now.
ANDREW: It’s interesting — you say for Canadian oil producers this could be a potential historic catalyst, turning this country’s heavy oil into a premium product because it’s reliable.
PATRICK: First and foremost, I would say we never predicate an investment thesis on human tragedy. The exogenous events happening right now — and the price strength we’re seeing that could generate strong cash flows in the short term — that’s not the investment thesis.
The investment thesis here is Canada as a reliable source of crude feedstock for refineries around the world. Now there are some limitations to how we can ship that. We do have good volumes that can be exported out of the Gulf, and we have a little bit of spare capacity in TMX where spot capacity could probably be taken up in the near term, although there may be a bit of a time lag.
It really shows that many Canadian businesses have become anti-fragile. They’ve had to deal with a number of issues — regulatory challenges, poor pricing differentials and weak crude prices.
The efficiency and strength with which they run their businesses now function well even at much lower prices than five years ago. When you get events like this, it really underlines the strength of that business model. To us, that should re-rate the multiples for these businesses.
ANDREW: Two stocks that have caught your eye — start off with Vermilion. What’s your thesis there?
PATRICK: My partner Amir covers Vermilion. The thesis on that stock really revolves around their European gas production and being a beneficiary of the strength we’re seeing in European gas markets.
ANDREW: And then also Valeura, because they have markets outside North America as well.
PATRICK: Yes. Again, my partner Calvin covers that particular stock. It’s a similar thesis — access to Asian markets today for their production, without the war-related shipping risk for those volumes.
What I would add is a couple of Canadian businesses we would look at — Cenovus, for example. They have the ability to ship crude. I actually spent last week in Texas with the company before the events of the weekend, and we were already quite positive coming out of that trip.
One of the things they talked about while we were on the road was their ability to ship heavy crude out of the Gulf as well as on TMX. So they’re going to be able to capture some of this value in the short term.
But even outside this sort of short-term shock, we thought the business looked very well positioned.
ANDREW: Valeura is interesting as well, because they produce oil in the Gulf of Thailand, and Thailand is among the countries seen as extremely vulnerable to any cutoff or sharp increase in oil prices.
PATRICK: Yes, and that’s one of the things we talked about in the report. If you look at Asian storage levels, some are actually pretty robust coming into this — particularly China.
We would say there’s a bit of nuance to that. The “teapot” refineries in China are more vulnerable than the larger refineries that have access to the strategic petroleum reserve.
We would also say India came into this with a somewhat weaker crude storage position, so they could be vulnerable if this situation persists.
ANDREW: We’d better jump. Thank you very much indeed for joining us, Patrick.
PATRICK: Thank you.
ANDREW: Patrick O’Rourke, managing director at ATB Cormark Capital Markets.
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This BNN Bloomberg summary and transcript of the March 6, 2026 interview with Patrick O’Rourke are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
