Albertan oil and gas industry impacted by ongoing U.S.-Iran turmoil

Crude oil prices dropped sharply Monday after Iran launched missiles toward a U.S. military base in Qatar, in retaliation for American airstrikes on three sites in Iran early Sunday morning.

North American benchmark crude fell by seven per cent, landing just above US$68 a barrel.

Richard Masson, an energy expert and former chair of the Alberta Petroleum Marketing Commission, said the dramatic price drop came as concerns eased about a major disruption in global oil supply.

“The big risk is that Iran or some of its proxies, like the Houthis, try to shut the Strait of Hormuz,” said Masson. “About a fifth of all petroleum in the world moves through that vital artery. So it looks like that might not happen, and crude prices have been going up in anticipation that it might.”

While Monday’s price dip may offer temporary relief at the pumps, Masson said Alberta will not be immune to the broader repercussions of escalating U.S.-Iran tensions.

“The other big thing right now is security of supply,” he said. “It has become a much more dominant issue for all of the Western countries since Russia invaded Ukraine. And now, with all the turmoil in the Middle East, it’s doubly important that we have secure sources of supply.

“Canada, of course, is one of the world’s secure sources of supply, and so hopefully this will result in more investment long-term.”

Alberta Premier Danielle Smith has repeatedly called on the federal government — as recently as last week — to allow tanker traffic on the Northwest Coast and expand Alberta’s access to global markets.

Masson said that as the world’s fourth-largest oil producer, Canada should be scaling up production to meet growing international demand — but in a way that is environmentally responsible.

“We can increase our production if we can get market access through pipelines to the West Coast, for example, and we can become a reliable supplier to other countries in the world,” he said. “The problem is, there are no companies who want to build that pipeline, because building pipelines has turned out so badly over the last decade. Everybody who’s tried it has lost billions of dollars.”

As for everyday Canadians, Masson said Monday’s drop in crude prices is likely not an indicator of long-term trends. Despite the dip, prices at the pump could still climb in the coming months.

“With ongoing unrest in the Middle East, you can expect to pay more over the summer,” he said.