In this week's MBP Intelligence Briefing, Ben Woodfinden and Ken Boessenkool welcome back commodity economist Rory Johnston to the podcast, founder of Commodity Context, to unpack one of the most significant developments in global energy markets in decades.
The discussion begins with the ongoing conflict involving Iran and the Strait of Hormuz—one of the world's most critical energy chokepoints—and why many analysts believed oil prices were headed toward US$200 per barrel. Rory explains why that prediction never materialized, revealing the surprising role China played in stabilizing global markets through an unprecedented collapse in crude oil imports and what may be the use of vast underground strategic oil reserves hidden from public view.
The panel explores how Saudi Arabia, Russia, China and the United States have all influenced the current energy landscape, why global oil markets remain far more fragile than many realize, and how geopolitical instability is permanently changing investor perceptions of energy security.
Finally, the conversation turns to Canada. Could this crisis strengthen the case for new pipelines? Should governments—not private industry—be responsible for strategic energy infrastructure? And what role could Canada play as one of the world's most reliable democratic energy suppliers in an increasingly unstable world?
In this episode, they discuss:
- The ongoing Iran conflict and the Strait of Hormuz crisis
- Why analysts expected oil to reach US$200 per barrel
- How China prevented a global energy shock
- China's mysterious underground strategic oil reserves
- The collapse of Chinese crude imports
- Russia's refinery outages and their impact on global fuel supplies
- Whether geopolitical risk has permanently changed oil markets
- Why Canada may be entering a new era for pipeline development
- The strategic value of energy infrastructure beyond simple economics
- What higher geopolitical risk means for Canadian energy exports
On the Strait of Hormuz Crisis
- Johnston: The closure of the Strait of Hormuz represented the largest oil supply disruption in modern history, removing roughly 13 million barrels per day from global markets almost overnight.
- Roundtable: While many expected oil prices to spike above US$200 per barrel, the anticipated global energy crisis never fully materialized.
- Johnston: Saudi Arabia's east-west pipeline provided an important release valve, allowing millions of barrels per day to bypass the Strait of Hormuz and reducing some of the market shock.
- Roundtable: Although oil prices remained below worst-case forecasts, the geopolitical risk surrounding global energy supplies has fundamentally changed.
On China's Hidden Role
- Johnston: China's crude oil imports fell by an astonishing 5–6 million barrels per day, one of the largest demand swings ever recorded.
- Johnston: One of the leading theories is that Beijing has quietly relied on enormous underground strategic petroleum reserves that cannot be tracked using satellite imagery.
- Roundtable: China's lack of transparency has become one of the biggest challenges for global energy analysts attempting to forecast future oil markets.
- Johnston: The global oil market is now heavily dependent on decisions made inside Beijing—decisions that remain largely hidden from public view.
On Global Energy Markets
- Johnston: The combination of Middle East conflict, Russian refinery disruptions, and Chinese demand shifts has created one of the most unusual oil market environments in decades.
- Roundtable: Rather than traditional supply-and-demand fundamentals, geopolitical decisions are increasingly driving energy prices.
- Johnston: Even if military conflict subsides, higher geopolitical risk premiums are likely to remain embedded in global energy markets.
On Canada's Energy Opportunity
- Woodfinden: The current crisis strengthens the strategic case for Canada becoming a larger and more reliable energy supplier to global markets.
- Johnston: Export diversification has become far more valuable than many previously appreciated, especially as global supply chains become increasingly vulnerable.
- Boessenkool: Strategic infrastructure like pipelines may need government involvement because their value extends well beyond normal commercial returns.
- Roundtable: Canada's energy future may depend less on whether pipelines can generate immediate profits and more on whether they provide long-term national resilience.
On Pipeline Development
- Johnston: Existing pipeline corridors offer lower-cost expansion opportunities, but entirely new export routes may provide Canada with much greater strategic flexibility.
- Roundtable: The discussion around pipelines has shifted from environmental politics toward energy security, economic resilience, and international competitiveness.
- Johnston: Infrastructure that appears underutilized during normal periods can become invaluable during geopolitical crises.
Key Takeaways
- The Strait of Hormuz remains one of the world's most important energy chokepoints.
- China played a decisive role in preventing a much larger global oil price shock.
- Hidden strategic oil reserves may now be one of the biggest unknowns in world energy markets.
- Geopolitical risk—not just supply and demand—is increasingly driving oil prices.
- Canada's stable political system and abundant energy resources position it to become one of the world's most important long-term suppliers.
- Future pipeline decisions may be driven as much by national strategy as by commercial economics.
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