Transcription
Canada has changed its position on the Iran war four times in 10 days.
Day one: Canada supports the United States acting to prevent Iran from obtaining a nuclear weapon and to prevent its regime from further threatening international peace.
Day four: These actions are inconsistent with international law.
Day five: One can never categorically rule out participation. We will stand by our allies.
Day 10. So which is it? While the headlines focused on the contradictions, we wanted to figure out why this was so hard to answer. And as it turns out, Canada has a genuinely complicated relationship with this war. And it quietly connects to our gas bill, our mortgage rates, and our military credibility. Not to mention a community of over half a million Canadians and above all what kind of country we actually want to be. So, let's get into it.
On February 28th, the United States and Israel launched joint military strikes on Iran. They targeted military infrastructure, air defense systems, and killed Supreme Leader Ayatollah Kam within the first 24 hours. 10 days later, the bombs were still falling and Iran just named the Kame son as the new supreme leader. Israel's military has publicly promised to eliminate him. Trump says that he won't last long without American approval. Iran's foreign minister has rejected any ceasefire. Iran's response has been to wage a regional war, firing over 500 ballistic missiles and nearly 2,000 drones at Gulf states and US military bases and targeting the Strait of Hormuz, the narrow waterway through which roughly 20% of the world's entire oil supply moves every single day. Tanker traffic through the strait has collapsed. Bahrain has declared force majeure on its oil operations. Qatar, one of the world's largest LNG exporters, paused production. Oil, which was sitting at about $70 a barrel before this all started, briefly hit $120 bucks this week. Asian stock markets are in freefall. The war has now pulled in Lebanon. Hezbollah has opened a second front against Israel, and Israel has launched a ground incursion in the south. Seven American soldiers are dead. And the conflict has now touched more than a dozen countries, including Turkey, a NATO member. That's where we were on day 10.
Now, let's talk about what this means for us Canadians. When it comes to Canada, we are structurally one of the most conflicted countries on Earth when it comes to the Middle East. And that's not an exaggeration. It's a function of our geography, our economy, and the deep internal divisions that we've been patching over for 50 years. We produce massive amounts of oil. We also import massive amounts of oil. Those two facts produce completely opposite outcomes from the same crisis, and they map almost perfectly onto the Alberta versus everybody else fault line that defines Canadian politics.
The increase in the price of oil is an immediate boon to the province's finances. A $1 increase translates to roughly $750 million in royalty revenues.
If you live in Alberta, Saskatchewan, or Newfoundland, or you work in the energy sector anywhere in Canada, this war is financially speaking good news for you. Canada produces close to 5.5 million barrels of oil per day. That makes us the fourth largest producer in the world behind the US, Russia, and Saudi Arabia. In the last decade, our oil sands, which used to be considered expensive to run, have gotten dramatically more efficient. And Canada's five biggest producers can now break even and still pay their dividends at prices between $40 to $43 per barrel. And given that oil just hit nearly $120 this week, that can be an extraordinary margin. When global oil prices go up, every extra dollar per barrel flows almost directly into revenues of Canadian producers. And through royalties and corporate taxes, they go into provincial and federal government coffers. If prices hold anywhere near current levels, we're talking about transformational numbers for Alberta's budget, for Canada's LNG export case, and for the very nation-building projects that we've been talking about in our recent videos right here.
Here, where it gets complicated and where it affects the rest of Canada very differently. Higher oil prices are also making everyone's life more expensive. Sure, Alberta gets to offset these costs with higher revenues, but other provinces, not so much. Quebec and Atlantic Canada sit in very different positions. Quebec is a partial exception. Its electricity grid runs almost entirely on hydropower, which means that Quebec residents' heating bills and power costs are largely shielded from this oil crisis. But Quebec's cars, trucks, and supply chains still run on oil. Its refineries import the majority of their crude through pipelines that transit the United States. This oil is priced off global benchmarks and they have no control over it and they have no royalty revenue coming back to offset the costs. Quebec's grid is protected but the gas stations aren't. Atlantic Canada is a slightly different story. The Irving Oil refinery in St. John, New Brunswick is Canada's largest refinery, processing over 300,000 barrels per day and accounting for 17% of the country's total refining capacity. There are no pipelines connecting it to the Western Canadian supply. Every barrel of crude arrives here by sea. Its suppliers are a mix. The US is the largest source, followed by Nigeria and Saudi Arabia. Saudi Arabia alone accounted for roughly 20% of Irving's crude imports as recently as 2023. Ontario is even more nuanced. In 2024, Ontario's refineries sourced about 86% of their crude domestically, mostly Alberta oil flowing east through the Enbridge mainline. So Ontario isn't importing Middle Eastern oil. But that doesn't protect Ontario consumers at the pump. And here's why. Oil is a globally priced commodity. It doesn't matter that the crude came from our own country. The price at the Mississauga gas station is still set by Brent and Brent now is high. British Columbia is the most complicated province in this story. It produces oil and gas. It hosts the Trans Mountain pipeline which now gives Alberta producers access to global markets for the first time. And it's building the LNG Canada which becomes a stronger export case every day that this war continues. On paper, BC has skin in the energy upside. But BC consumers also pay some of the highest gas prices in the country. Its refineries import US crude. And the province's own clean energy politics mean that it captures less of the oil benefit than Alberta does. And regardless of the province, the war doesn't just stop at the pump. Every trucked good, every heating bill, every air freight shipment gets more expensive when energy costs rise. Capital Economics estimated that if crude reached $100 bucks per barrel, it would add 6 to 7 percentage points to global inflation. And we blew past $100 bucks on day nine. That might sound like a rounding error, but for the Bank of Canada, which has spent two years carefully managing rate cuts to give relief to mortgage holders, even a fraction of a percent of new inflationary pressure could be enough to pause or reverse the cycle. If that happens, mortgage renewals will be painful. First-time home buyers who have been waiting for relief will have no choice but to continue waiting. The affordability crisis that's been strangling Canadian renters and homeowners will get worse. Not because of anything that we did specifically, but because of a war that we had no vote on that started in the Persian Gulf.
And that's not all. The Strait of Hormuz is still paralyzed after Iran blasted these vessels in the shipping lane. Let's linger on the Strait of Hormuz for a moment because what's happening there now could be Canada's biggest opportunity. So imagine this is a waterway about 33 km wide at its narrowest point with a usable shipping lane of just 3 km in each direction. Through that corridor, 20 million barrels of oil flow every single day. That's roughly 1/5th of all the petroleum consumed on the planet. Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE. None of them can get their oil to market without passing through this 3 km lane that is bordered on one side by Iran. Iran has now effectively declared it closed. This event arguably creates the single strongest argument Canada has ever had for completing its own energy export infrastructure. LNG Canada, our first major world-class natural gas export terminal on the BC coast, just came online. It has the capacity for about 14 million tons per year. It's a meaningful but not enormous amount. Europe and Japan are already scrambling for alternatives to Middle Eastern gas right now. Canada has the gas. We just don't have enough terminals, pipelines, and export capacity to fully capitalize on this. If there was ever a moment for an emergency push on Canadian energy infrastructure, not even for political reasons, but for purely economic and geopolitical reasons, right now is the moment. The demand is there. The price signal is there. The only thing missing is the will and the ability for us to build fast enough.
So, what does all of that have to do with the fact that Canada cannot make up its mind about this war? An Angus Reid poll released this week showed that 49% of Canadians oppose the US-Israeli strikes with only 34% in support. So the government's job is to manage a skeptical public while simultaneously trying not to anger a president who can blow up our trade deal with a tweet. Experts are calling it "studied ambiguity," which is a diplomatic term for saying something different every day and hoping that no one has it up. The brutal truth is that Canada is protecting Kuzma at the expense of a coherent foreign policy and we can understand why. 76% of our exports go to the US. When the existential trade relationship is under threat, some principles can become negotiable.
And now here is the question that many don't want asked. If Canada is asked to contribute, what do we actually have?
Canada is about to spend big on defense. We committed to reaching 2% of GDP on defense this year and it happened just a few months ago. That's a real and significant increase. But the thing is that commitments on paper today don't really make things happen instantly tomorrow. Less than half of our naval fleet was operational as recently as 18 months ago. The gap between what we say we want to do and our actual warfighting capability has never been more publicly exposed. And our allies are watching.
Here's where another a much more human layer gets added to this. Canada is home to roughly 200,000 Iranian Canadians. It's one of the largest Iranian diaspora communities in the entire world. And this war is not abstract to them. When strikes began and news broke that K had been killed, some celebrated openly in Toronto and Vancouver. They had watched their families inside Iran live under a regime that imprisoned, tortured, and executed political dissidents for decades. For that part of the community, this was a liberation. But for others, particularly those with parents and siblings still in Tehran, this week was meant watching a city that they grew up in get bombed. With over a thousand civilians now confirmed dead, while airspace closed and phones go quiet.
And then there is the Jewish Canadian community. Roughly 400,000 people, making Canada the fourth largest Jewish diaspora in the world after Israel, the US, and France. And more than three-quarters of them are concentrated in Ontario and Quebec. For this community, Iran's regime is not a distant geopolitical concept. It's the entity that has funded Hezbollah, called openly for Israel's destruction for decades, and allegedly spent years pursuing a nuclear weapon program.
Iran could produce a nuclear weapon in a very short time. They have the wherewithal to make a bomb very quickly if they wanted to do it. Iran is so dangerous. Weeks away from having the fissile material. They're very close. They're 6 months away from being about 90% of having the enriched uranium for an atom bomb. Iran is gearing up to have to produce 25 bombs, atomic bombs a year. Iran will be capable of producing nuclear bombs within 3 to 5 years. Time is running out.
When Iran's military infrastructure started getting dismantled, a significant part of this community felt something closer to relief than horror. They probably don't even see it as aggression. Rather, finally addressing the threat that they've been talking about for years and years and end. These two groups aren't two sides of an abstract debate. All of them can be our neighbors, our colleagues, and in some cases, literal family members watching the exact same war and feeling potentially even completely opposite things about it. And the tension lives right here in Canada in the same cities and the same writings and the same voter base that our government will want to keep happy.
Now, here's the thing. This conflict doesn't begin and end with Israel and Iran. In retaliation, Iran launched hundreds of drones and ballistic missiles at US military bases in Qatar, the UAE, Kuwait, Iraq, Jordan, and Saudi Arabia. It struck civilian infrastructure across the region. As of this week, Iran has fired counter-strikes in more than a dozen nations. One decision made by two leaders has suddenly brought military action to the entire Middle East region. Was the rest of the region even consulted before the attack? Some commentary from officials indicate that they weren't. Trump and Netanyahu deliberately disguised the timing of the attack because they were afraid that word would get out and Iran's supreme leader would go into hiding before the strike could be executed. The result is a handful of the Middle Eastern countries that host US military bases and have spent years building relationships with Washington woke up on March 1st to find themselves in a war that they didn't even sign up for with no time to evacuate civilians or prepare their defenses.
Why does that matter for Canada specifically? Well, because we're not just a bystander in this region. We are, as of literally a few months ago, an active investor in it. And it was part of our big diversify away from the US strategy, which is now literally going up in fireworks. In November 2025, Trudeau flew to Abu Dhabi for the first visit by a Canadian prime minister to the UAE in over 40 years. He came back with a signed foreign investment protection agreement, the launch of full three trade negotiations, and most significantly a commitment from the UAE to invest $50 billion in Canada. That agreement would be targeting LNG, critical minerals, ports, and AI infrastructure. That handshake was the cornerstone of Canada's entire trade diversification strategy away from the US. Just 6 weeks ago, Canada's trade minister was in Qatar trying to advance negotiations and open up new market access agreements. Qatar, which preemptively paused LNG production after being hit with over 100 missiles and 50 drones, is the same Qatar that Canada removed visa requirements for in November 2025 to accelerate business travel and commercial ties.
Now, how can this war affect our day-to-day lives in the most tangible ways? Let's begin with one variable that changes almost every outcome that we might think about. How long this war lasts. A ceasefire in the next week or two looks completely different from a conflict that drags into the summer. If you look in Canada's energy sector, Alberta, Saskatchewan, offshore Newfoundland or anywhere in the energy supply chain, a short war means producers will make more profits, royalties will flow, and things normalize. A more prolonged conflict will structurally reprice Canadian oil and make the LNG export case so undeniable that it will force the infrastructure investment conversation that we've been deferring for for 20 years. And either way, the near-term outlook will have improved. But only the second scenario is truly transformational for Canada.
If you are a renter, a first-time home buyer, or coming up on a mortgage renewal, the Bank of Canada was already in a deliberate hold at 2.25% before this thing started. The next rate announcement is next week, and a brief conflict probably doesn't change the path much, but a prolonged one will most likely do it because sustained oil-driven inflation won't just delay the rate relief, it might actually create conditions for a rate hike. If you're in manufacturing, logistics, trucking, or any business that moves things, a short war means a painful few weeks of fuel charges. A long conflict will mean that your cost structure will have changed for a while. If you have investments, markets right now are pricing in a short scenario. That's why energy stocks have moved, but broader indices haven't really collapsed. If the Strait of Hormuz stays effectively closed for weeks at a time rather than days, which is where it's trending on day 10, you're looking at a repricing across all sectors, not just energy.
We've laid out a lot in this video. What ties all of it together is a single and uncomfortable truth that this crisis exposes Canada's contradictions the country has done nothing about for decades. We produce oil and we import oil. We need American goodwill and NATO credibility at the same time. We've just made investment partnerships in a region that's now getting bombed without warning. Every other country gets to pick a lane. Canada has to navigate all of them at once. And right now, we're doing it without a coherent foreign policy position. We have an underequipped military and our energy infrastructure is just not fully there. The long-term answer for us is the one that we already know. Open up the LNG Phase 1 capacities to the full and move the Phase 2 expansion along. Build the East Coast export capacity that has never existed. Complete the East-West pipeline connection so that central Canadian refineries can actually run on Canadian oil instead of imported crude. And finally, stop being a country where one province's success is another province's heating bill. The Iran war didn't create any of this. It just made the cost of deferring these issues impossible to ignore for Canada.
If you want to go deeper on the energy infrastructure case, the defense spending story, or how Canada navigates a rupturing world order, those are all the videos that we've made. And let me know in the comments, do you think Canada's position on this war is the right one? And if not, what should it be? Thanks so much for watching. If you enjoyed this video, make sure you tap the like button below, share it with your friends, and make sure you subscribe not to miss any future videos about the future of Canada. Take care.