BEYOND THE BARREL: The Other Supply Shocks Brought on by the Iran War – ATB

The tentative memorandum of understanding reached over the weekend between the U.S. and Iran establishes an immediate 60-day ceasefire, the lifting of the U.S. naval blockade, and a framework to reopen the Strait of Hormuz toll-free. But while global markets can breathe a sigh of relief ahead of the formal signing in Switzerland this Friday, the structural damage to global supply chains cannot be undone overnight and neither can the geopolitical risk premiums that will be baked into global supply chains moving forward.

While our June Alberta forecast was released last week ahead of the agreement, our outlook for the economy remains unchanged. This morning the futures market was pricing WTI oil prices at just over US$80/bbl in 2026, not far off our $84/bbl forecast, and well above pre-war levels. Next year, we assumed US$70/bbl, which is largely in line with futures prices. Moreover, oil prices have less torque on the real economy than in the past, with producers remaining cautious on new investment spending in part due to uncertainty over future pipeline capacity. More importantly, we see a fundamental shift in the way that supply chains are viewed today, positioning safe and stable jurisdictions like Canada favourably.

While crude oil has dominated the headlines, today’s edition of The Twenty-Four shifts the focus to the other critical shortages brought by the war in Iran.

1) Petrochemicals

When we think about the Strait of Hormuz, we naturally think of oil tankers. However, the Strait is also critical for the chemicals that industrial economies are built on.

About $20-25 billion worth of petrochemical products pass through the Strait annually. Since the war began, plastic prices have surged to roughly four-year highs. To illustrate the impacts of the war, ethylene outages from the war now amount to 12% of global production. Ethylene is the base feedstock for the most widely used plastic in the world, polyethylene, found in packaging, piping, auto components, and medical devices.

Plastic manufacturers in Asia and Europe, which are heavily reliant on the region, are being squeezed. However, North America is relatively advantaged due to its feedstock availability. The market size of Canada’s petrochemical manufacturing industry is $7 billion, the majority of which is concentrated in Alberta, Ontario, and Quebec. Reinforcing Alberta’s leading position is Dow’s landmark Path2Zero project, which is under construction and, once completed, will be the world’s first net-zero emissions integrated ethylene facility.

2) LNG

Natural gas is another crucial commodity that has faced large disruptions. Europe entered 2026 with gas storage levels significantly below recent years, leaving it poorly positioned when Strait of Hormuz traffic collapsed. About 20% of global LNG trade transits the Strait, with Qatar as the dominant supplier. Iranian strikes on Qatar’s Ras Laffan LNG complex—the world’s largest—have cut Qatar’s LNG capacity by approximately 17%, with repair timelines of three to five years.

For Canada, the opportunity is real but time-constrained. The Asia Pacific Foundation of Canada has noted that Canadian oil and LNG are well positioned to take Asian market share from the Middle East, but infrastructure decisions made in 2026–2027 will effectively determine Asian energy supply patterns until the 2070s. LNG Canada in Kitimat is already ramping exports to Japan, South Korea, and the Philippines, while Woodfibre LNG and Cedar LNG are under construction. Potential projects include: LNG Canada Phase 2 and the proposed Ksi Lisims project, which has recently signed onto an LNG purchase agreement with Germany.

3) Aluminum

Wood Mackenzie projected that the global aluminum market was already heading for a supply deficit of 200,000 tonnes in 2026 before the war, this deficit was projected to widen to 800,000 tonnes by 2028. The war only exacerbated this dynamic. Iranian missiles struck the Emirates Global Aluminium Al Taweelah site and Aluminium Bahrain, two of the Gulf’s largest smelters. Consequently, benchmark London Metal Exchange (LME) aluminum futures briefly touched its highest levels since 2022.

This shortage has a Canadian angle. After a steep 50% tariff was implemented on Canadian aluminum, more Canadian aluminum found its way to European markets. While American aluminum imports from Canada dropped 27% in 2025, exports are starting to bounce back in 2026. However, U.S. reliance on Middle Eastern aluminum has increased, leaving American manufacturers more exposed as global supply tightens.

4) Helium

AI investments are at the top of every headline. Yet, the shortage of helium is often overlooked despite its critical links to AI and its infrastructure.

Helium is co-produced with natural gas. Qatar’s Ras Laffan complex, already damaged by Iranian strikes, was responsible for a substantial share of global semiconductor-grade helium supply. The strikes removed roughly 30% of global semiconductor-grade helium supply within days.

Helium is essential because its exceptional cooling power and chemical inertness are critical for controlling extreme temperatures and preventing defects during the delicate chip-printing process. Taiwan Semiconductor Manufacturing Company, Samsung, and SK Hynix collectively rely on the region for over 60% of their helium supply, with the disruption potentially impacting production of smartphones, laptops, and AI data centre GPUs.

On the Canadian side, Alberta and Saskatchewan are the only provinces that commercially produce helium. Saskatchewan is the most active commercial helium producer in the country, while Alberta is in its emerging stages. It’s estimated that Canada has helium resources that would make it the fifth largest in the world.