Canada leans on record oil production to meet pledge as prices spike and pipelines near capacity
Canada has agreed to contribute 23.6m barrels of oil to the International Energy Agency’s emergency release, even though it does not hold its own strategic petroleum reserve, CBC News reports.
Oil prices have jumped by about a third in two weeks, briefly surging past US$120 a barrel, and the world’s major oil consumers are scrambling to contain the damage.
The agency’s 32 member countries plan to release 400m barrels from emergency reserves, the largest drawdown in its history, to address shortages and high prices linked to the war in Iran, the Financial Post reports.
Canada is a net exporter of oil and IEA rules do not require it to maintain emergency reserves.
Instead, Canada will deliver its share through higher production.
Global News reports that Canadian oil output will rise by 140,000 barrels per day starting in April, mainly from already planned increases in Alberta’s oil sands.
That amounts to a 2.6 percent increase from the 5.3m barrels per day Canada produced on average in 2025, according to the Canada Energy Regulator.
Reuters reports that the Canadian Association of Petroleum Producers says Canada is already at record highs for oil and natural gas output and exports, with “very minimal” room to raise production further in the short term.
CAPP chief executive Lisa Baiton told Reuters that Trans Mountain, the only crude pipeline with direct access to international markets, is nearly 90 percent full, and that “any meaningful new production growth would require additional pipeline capacity and additional export capacity.”
Energy Minister Tim Hodgson said the federal government supports international action on energy security and is working “urgently” with industry to assess how quickly and by how much Canada can respond.
Hodgson told reporters the government is speaking with oil producers about delaying planned maintenance at oil sands facilities to temporarily increase output, and is asking refineries that rely on imported crude to use more domestic oil to free up supply elsewhere.
He also said Canada’s natural gas exports will expand in the coming months and provide “additional fuel to allies around the world,” Reuters reported.
Not all observers expect policy to change outcomes materially.
Rory Johnston of the Commodity Context newsletter told Reuters “there’s nothing Canada can do, let’s be real,” arguing that any delayed maintenance would reflect market signals, not government instructions.
He added that higher demand from Asian buyers could pull more Canadian barrels west via Trans Mountain and away from US refineries, which “would help since the epicenter of the supply loss is in Asia,” but only on a market basis.
The underlying shock comes from the Strait of Hormuz, where roughly 20 percent of global oil normally moves each day.
Global News reports that flows have “all but vanished” as Iran attacks some commercial vessels and likely uses underwater mines.
Higher prices are already reaching consumers.
The Financial Post reports that fuel costs have risen sharply at the pump, with potential knock-on effects for groceries and other goods.
Prime Minister Mark Carney is framing Canada’s response in terms of reliability and risk.
According to CBC News, he told reporters in Oslo that “from Canada’s perspective, we are low-risk producers of oil, we are low risk producers of natural gas. We’re reliable,” and described Canada as a “safe, low-risk, low-cost, and increasingly low-carbon exporter.”
Carney has also highlighted Bay du Nord as a medium-term contribution to supply.
CBC News reports that he called the offshore Newfoundland project “a very attractive project off Newfoundland, which we look to move forward,” and said it will provide “very low carbon oil in terms of production and transportation.”
The Canadian Press notes that Bay du Nord, about 500 kilometres east of St. John’s, was approved in 2022 as a roughly $14bn development but still awaits a final investment decision, expected in 2027, with first oil not until 2031.
Norwegian Prime Minister Jonas Gahr Støre described Bay du Nord as a “huge project” and a “major energy undertaking” that will create “a great number of jobs, income to local and central authorities and you know, produce energy,” according to CBC Newfoundland and Labrador.
Environmental groups in Canada argue the project contradicts Ottawa’s pledge to end subsidies for oil and gas production, The Canadian Press reported.
