How the Iran War Exposes Canada's Pipeline Vulnerability and What It Means for US Energy Leverage

The Iran war is not just a distant Middle Eastern conflict — it’s a geopolitical earthquake shaking the foundations of global energy security. Saudi Arabia’s bold move decades ago to build the East-West Pipeline circumventing the Strait of Hormuz now looks like a masterstroke. While neighbors tied to that chokepoint face economic hardship and export paralysis, Saudi Arabia continues to sell oil unimpeded. Canada should be paying close attention.

For over 70 years, Canada has been stuck in a pipeline debate that has become a national obsession but little more than political theater. The Trans Mountain expansion and the failed Northern Gateway project are recent examples of this paralysis. But the Iran war changes the calculus entirely. It exposes the fragility of relying on traditional routes and the whims of US policy, which can impose tariffs, export restrictions, or sudden shifts that crush Canadian oil revenues.

Jackie Forrest, executive director of the ARC Energy Research Institute, argues that Canada needs to stop treating pipelines as mere commercial ventures that must be justified by immediate supply and demand. Instead, pipelines must be seen as strategic insurance policies — infrastructure that provides Canada and its trade partners with options and leverage in an increasingly volatile world.

Canada’s current pipeline network funnels most of its oil south to the United States, leaving it vulnerable to Washington’s political gamesmanship. The US can and does weaponize energy trade to serve its geopolitical aims, whether by threatening tariffs or cozying up to rivals like Venezuela. A new greenfield pipeline to the West Coast would open direct access to Asian markets, diversify export routes, and reduce dependency on the US.

This is not just about profits. It’s about sovereignty and resilience. Forrest points out that even if a pipeline doesn’t run at full capacity, its value lies in the strategic flexibility it affords. This means rethinking pipeline financing and ownership structures — including more government involvement and accepting lower immediate returns in favor of long-term national security.

The economic stakes are enormous. Before the Trans Mountain pipeline expansion, limited market access was costing Canada around $4 billion annually. Worse, a hypothetical 10 percent US tariff could slash Canadian oil revenues by $15 billion or more, especially when prices are high. These are not abstract numbers; they represent real risks to Canadian jobs, government revenues, and economic stability.

Canada’s political leaders and industry must stop dithering. The Iran war has exposed the dangers of overreliance on a single export route controlled by a geopolitical rival. Strategic infrastructure like a new West Coast pipeline is not a luxury or a partisan issue — it is an urgent necessity for Canadian economic sovereignty and energy security.

In a world where great powers weaponize their economies, Canada cannot afford to be caught flat-footed. It’s time to act boldly, build the pipeline, and secure Canada’s place as a resilient energy supplier on the global stage.