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From Alberta鈥檚 oil sands to Newfoundland鈥檚 offshore petroleum, Canada has some of the largest oil and gas reserves in the world. But despite this abundance, it鈥檚 mostly been a price taker within the global market鈥攊n other words, events elsewhere impact us more than we impact them. Most recently, the war in Iran has disrupted oil and gas shipments through the Strait of Hormuz. Prices are soaring due to attacks against regional oil refineries, ships and storage across the Persian Gulf, disruptions to insurance markets and, most importantly, the conflict鈥檚 ambiguous endgame and endpoint. Canadians are feeling it at the gas pumps.

Canada has little capacity to shape the trajectory of the current energy crisis. Only a small number of petro-states鈥攖he U.S., Russia and Saudi Arabia on the supply side, and China and India on the demand side鈥攈ave the volumes required to influence global oil prices. (Swap in Qatar for Saudi Arabia and the major players are basically the same for liquefied natural gas, or LNG, markets.) However, Canada is inching its way toward superpower status.

Energy efficiency, ethanol and electric vehicles have put downward pressure on oil demand in OECD countries, but in non-OECD countries, it continues to surge, growing by almost two per cent annually over the last decade. The picture on the LNG side is similar, only with even more robust demand. Canada鈥檚 current suite of oil and gas projects could fulfill these needs. Pipeline initiatives like the Trans Mountain Expansion Project will build deeper links to Asia. Additions to our already vast network of pipelines to the U.S. are also underway, including (another) potential Keystone XL revival, along with more Canadian gas to backstop the data centre鈥揹riven energy boom down south. And, if successful, the Carney government鈥檚 new economic partnerships with countries like China, India, Japan and South Korea will fuel investment in new Canadian upstream supply.

In the wake of the war in Iran, it鈥檚 entirely possible that Canada鈥檚 oil-and-gas industries will follow a similar growth pattern to those of the U.S. back in 2008. Then, like now, prices spiked and geopolitical uncertainty weighed on supply. High oil and gas prices metastasized with a financial-sector crash, leading to a sharp recession. Producers that had previously spent decades chasing 鈥渇rontier鈥� resources in Venezuela, Iraq, and Libya鈥攋urisdictions that were geologically complex, geopolitically risky or both鈥攔econsidered their approaches. When the dust finally settled and oil demand rebounded, American shale emerged as the clear winner. Most dramatically, the U.S. flipped from being an LNG and crude-oil importer to an exporter, securing supply for its allies in Europe and Asia and shifting the global market onto more stable footing.

Today, the geopolitics of oil are the most chaotic they鈥檝e been since the 1970s. Consumers affected by the war in Iran will be seeking low-risk supply from stable markets like Canada, positioning us to achieve a more globally significant role in energy security. After nearly a decade of dysfunction, Ottawa Liberals and Alberta Conservatives are working together to make this happen, aligning on the need to diversify markets and increase our economic resilience in light of the trade war. Indigenous partnerships are also proliferating, particularly in LNG, where several First Nations groups have ownership stakes in projects such as Cedar LNG, a proposed floating facility in Kitimat, B.C. Even our technology is becoming more innovative, as Canada鈥檚 oil and gas producers focus on lowering costs and increasing efficiency.

So what could stall our global oil-and-gas ambitions? First, market volatility and price spikes may destroy demand by encouraging product substitution. In the near term, utilities in developing Asian economies such as India, Pakistan, and Vietnam will likely switch from expensive LNG to cheap coal, echoing similar pivots by the U.S. and Europe during the 1973 Arab oil embargo and the Iranian Revolution in 1979. Wind and solar energy could gain market share as well.

Second, Canadian oil and gas producers won鈥檛 be making any sudden moves based on short-term market signals. The recent price explosion suggests they should ramp up production and release stockpiles of reserves into the market. In fact, this week, 32 member countries of the International Energy Agency agreed to release a record-high 400 million barrels of oil from emergency reserves to offset market disruptions. Still, producers will want to see sustained higher prices before redirecting cash flow into any major new growth. The recent price spikes won鈥檛 spur a wave of new oil and gas investments unless there are long-term reductions in supply from the Gulf. An extended war鈥攐r rocky post-war transition in Iran鈥攃ould cause this, without a doubt.

There are domestic barriers to expansion too. Canada鈥檚 push to increase its oil and gas export capacity faces opposition from environmental and some鈥攂ut by no means all鈥擨ndigenous groups. The Carney government has recently shaken up the country鈥檚 project-assessment and regulatory processes with an eye to faster and more streamlined approvals for so-called nation-building projects. The success of these initiatives will likely be the most critical factor in determining Canada鈥檚 oil-and-gas market share after the conflict in the Middle East is long over.

How exactly the energy market will look in the immediate aftermath of this war is still in flux. At the moment, governments are finding barrels wherever they can. Earlier in March, the Trump administration announced that it would grant temporary waivers to India to import more oil from Russia, in spite of stiff sanctions linked to the war in Ukraine. It remains to be seen whether the U.S. will be able to unlock stranded production in Venezuela. If Canada intends to become the world鈥檚 go-to alternative supplier of oil and gas by the time the next crisis rolls around, given the time it takes to mobilize resources and infrastructure, we should get to work now.