Oil price spike from Iran war could help Canada in CUSMA talks, experts say

Countries around the world are grappling with skyrocketing costs for key commodities like oil and fertilizer as the war with Iran continues to upend global trade.

Countries around the world are grappling with skyrocketing costs for key commodities like oil and fertilizer as the war with Iran continues to upend global trade.

With no end in sight, the war is likely to cast a shadow over trade negotiations ahead of the mandatory review of the Canada-U.S.-Mexico Agreement (CUSMA) on trade — and could ultimately offer Canada more leverage in those talks.

“If you’re sitting in Washington and you’re seeing what’s happening to global markets, you’re going to be looking at your secure producers and suppliers perhaps slightly differently from the way you … might’ve been looking at them before the conflict began, which was solely in tariff terms,” said Fen Osler Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations.

Crude oil and natural gas prices shot up after Iran essentially closed the Strait of Hormuz in response to the United States-Israel bombing campaign.

A fifth of the world’s oil typically sails through the strait.

But oil and gas are not the only commodities being affected.

Fertilizer inputs and potash are also being held up, causing global prices to spike with just weeks to go until planting season.

American farmers are already feeling the brunt of U.S. President Donald Trump’s erratic foreign and trade policies. The Trump administration provided a financial bailout last year after farmers were pummeled by increased costs and dropping sales due to the president’s worldwide tariffs.