The near closure of the Strait of Hormuz amid conflict in the Middle East is sending shockwaves through global energy markets, raising the risk of higher oil prices and broader economic impacts in Canada.
BNN Bloomberg spoke with Andre Cire, associate professor at the Department of Management at the University of Toronto Scarborough and the Rotman School of Management, about how disruptions at the critical energy shipping chokepoint could influence oil prices, Canadian fuel costs and potential benefits for Alberta.
Key Takeaways
- The Strait of Hormuz is one of the world’s most critical energy chokepoints, carrying roughly 20 per cent of global oil supply through the narrow waterway.
- Oil prices respond quickly to disruptions in global supply routes because crude is priced through international benchmarks such as Brent and WTI.
- Higher global oil prices would likely boost Western Canadian Select and increase government revenues in Alberta and Ottawa.
- Canadian consumers would still face rising gasoline and diesel prices because refined petroleum products are priced according to global crude benchmarks.
- Canada could play a stabilizing role in global supply during disruptions, but infrastructure constraints limit how quickly additional exports could expand.
Read the full transcript below:
ROGER: And the war in the Middle East has all but closed the Strait of Hormuz. Here to give us some insight on that is Andre Cire. He is associate professor at the Department of Management at the University of Toronto and the Rotman School of Management. Andre, thank you very much for joining us today.
ANDRE: Hi. It’s a great pleasure to be here. Thank you for having me.
ROGER: It is an interesting time with this closure. Do you want to talk a little bit about why Canadian oil prices are so affected by something that’s only just happened, when we still have tons of oil here that we haven’t used yet?
ANDRE: Yeah, absolutely, that’s a great question. I think everybody’s asking this at the moment. Canada is a net producer of crude oil and benefits in some ways. You can see the price increases are also going to benefit Alberta.
But it is a paradox. What happens is that oil is a global commodity, and because it is a global commodity, it is traded according to international benchmarks. You mentioned Brent, and there is also WTI.
So even though we are exporting oil, we still have to pay international prices for it because, in a way, we are also an importer of oil. For example, we still need to buy refined oil products from the United States, around 30 per cent, and we also import oil for different purposes here in Canada. So even though we are producers, we still need to import oil and therefore pay international prices.
HADIZA: Professor, what’s your view on the insurance system? There has been chatter that there could potentially be government-led insurance to allow ships to carry oil outside of Hormuz. How credible do you think that is?
ANDRE: I do think it’s credible. We heard about this during the weekend. I imagine the United States is willing to provide some insurance because one of the reasons ships are not flowing through the Strait of Hormuz is that insurance companies are reducing the coverage they are willing to provide.
This is definitely one of the big bottlenecks at the moment. There would have to be negotiations with insurance companies. I believe it is credible that, if the situation persists, there could be some effort by countries such as the United States to help address that situation.
ROGER: And if the United States does that, where does that leave the insurance companies? They don’t want to send ships that run the risk of sinking and the disaster that would be. Even if they aren’t on the hook for the coverage, they’d still be involved.
ANDRE: Right. I must say that this has not yet been very well defined. There are still rumours, and there is a lot of uncertainty on many different levels in terms of insurance. We only know there are discussions.
How that would work remains unclear. If I were to speculate, which is probably a mistake on my part, it would likely be a temporary solution just to make sure some flow is able to move through the Strait of Hormuz.
HADIZA: What’s your view? Hormuz accounts for roughly 20 per cent of global oil production on a daily basis. What role could the G7 strategic reserves play in making up for that? My view is that it wouldn’t be sufficient. Do you think it could at least give us a few days or a few weeks in terms of supply?
ANDRE: Absolutely. When we think about markets, we are in a situation where supply has been cut very aggressively because of the Hormuz closure. It’s virtually closed, with around an 80 per cent reduction in capacity, while demand remains at similar levels.
By putting more oil into the market through strategic reserves, supply could improve a little bit and help reduce prices temporarily.
But it depends on how long this conflict continues. If it lasts a long time, then it becomes complicated because reserves would be depleted. Countries will also start looking for other markets. Canada could help there.
The issue is that consumers in Canada would also suffer because we would export more oil while paying higher global prices domestically. Still, countries may look for stable suppliers like Canada where they can secure reliable supply. So I agree it would be a temporary solution that might reduce some of the anxiety we are seeing.
ROGER: And you mentioned Canada being a possible source. But they might also look and say Canada can’t really supply much more. Do we have the capacity right now to get significantly more oil out of the ground?
ANDRE: Absolutely not. Canada is a large producer of oil in the West, particularly Alberta. But in the East we are large consumers. Ontario and Quebec consume a lot of oil.
It is surprising that it is cheaper to import oil from the United States. About 30 per cent of our refined products come from the U.S. It is easier to import oil from the United States than to move it from Alberta.
We do not currently have the capability to fully integrate supply across the country. That is something we have been discussing in recent years, and I hope this situation brings that discussion back to the forefront — how we can better integrate the provinces.
ROGER: And just how long would this have to continue for Canada to actually benefit, where people would turn to Canada and start investing? Some people think this could be over in two weeks, maybe a month.
ANDRE: It would not be short. It would probably have to last a few months. I am not sure if it would take a year. It is too hard to estimate.
It would require a structural change, and that takes time. Right now there is hesitation to take risks because there is uncertainty. We hear from the U.S. administration that the conflict could be limited in time, but there are also rumours it could last longer.
It is similar to the tariff situation. Companies hesitate to build factories because they do not know if tariffs will remain or change. The same uncertainty applies to oil prices.
This disruption is already cutting supply to Asia by about 80 per cent, and countries like Japan are heavily dependent on Gulf oil. The effects would spread to multiple industries and products.
So it would be difficult for countries to quickly decide to shift supply chains to Canada or elsewhere. The disruption would likely need to last a long time before those structural changes happen.
ROGER: Okay, Andre, we have to leave it there. But thank you very much for joining us.
ANDRE: Thank you. It was a pleasure.
ROGER: Andre Cire is an associate professor at the Department of Management at the University of Toronto and the Rotman School of Management.
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This BNN Bloomberg summary and transcript of the March 9, 2026 interview with Andre Cire 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.
