Photo by: NASA

BRIEFING NOTE

by Joe Calnan

August 2026

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Table of Contents

• Summary
• Context
• Considerations 
• Insights for Canada
• About the Author
• Canadian Global Affairs Institute

Summary

• Maritime chokepoints are narrow, geographically fixed passages through which a disproportionate share of the world's seaborne oil and LNG trade must pass, making them natural points of leverage and vulnerability.
• Since early 2026, a US-Israel-Iran war has produced a severe test of chokepoint stability in the Strait of Hormuz. Marine shippers and energy consumers have been forced to take extreme measures to adapt to the crisis.
• Canada occupies a privileged strategic position: its Pacific coast energy infrastructure bypasses the world's currently contested chokepoints, offering Asian customers one of the most secure sources of supply.
• Canada's advantage is time-sensitive. If Canada hopes to grow its energy trade in the region, it must expand export capacity on the West Coast before competitors adapt and geopolitical conditions evolve.

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Context

• Maritime chokepoints are narrow, geographically fixed passages through which a disproportionate share of the world's seaborne oil and LNG trade must pass, making them natural points of leverage and vulnerability.
• Internationally traded oil is usually transported by tanker and is often forced to transit maritime chokepoints such as the Strait of Hormuz, the Strait of Malacca, the Bab el Mandeb Strait, and the Suez Canal.
• The Strait of Hormuz, between Iran and Oman, is the most irreplicable chokepoint, historically carrying about 20 million barrels per day (b/d) of oil and roughly a fifth of global LNG trade.
• The Strait of Malacca, linking the Indian Ocean to the South China Sea, carries close to a quarter of global oil trade and is the primary route for Gulf energy reaching China, Japan, and South Korea.
• The Bab el-Mandeb Strait, between Yemen and the Horn of Africa, connects the Red Sea to the Indian Ocean.
• The Suez Canal and Panama Canal are manmade canals controlled by Egypt and Panama, respectively.
• While alternative marine routes exist for the Strait of Malacca (via the Sunda and Lombok straits) and the Bab el-Mandeb Strait (via the Suez Canal or around the Cape of Good Hope), there are no alternative marine routes for the Strait of Hormuz.
• Regional marine chokepoints can further complicate matters. Russian and Kazakh energy exports largely depend on transit through the Danish Straits and Turkish Straits, both of which are controlled by NATO members.
• Chokepoint stability has eroded since late 2023, when Houthi attacks on shipping in the Red Sea and the Bab el-Mandeb pushed a large share of Asia-Europe traffic onto the much longer Cape of Good Hope route.

Since early 2026, a US-Israel-Iran war has produced a severe test of chokepoint stability in the Strait of Hormuz

• Iran effectively closed the Strait of Hormuz in the opening days of March 2026, stranding hundreds of ships and prompting several Gulf countries to shut in oil and gas production.
• As of July 2026, Persian Gulf oil production stood 8.3 million barrels per day below pre-war levels.
• In mid-July 2026, Yemen's Houthis formally joined the war on the side of Iran, raising the risk that the Bab el-Mandeb Strait and the Red Sea corridor become a second active front alongside Hormuz.
• Analysts such as Edward Fishman increasingly describe this convergence of simultaneous chokepoint crises as a structural component of an “Age of Economic Warfare” rather than an isolated shock.
• Disruption at any one chokepoint raises insurance premiums, lengthens voyages, increases shipping costs, and pushes up global energy prices.
  

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Considerations

The central question is whether restrictions on maritime chokepoints will become established as a low-cost way for states and non-state actors to pursue asymmetric economic warfare, becoming a permanent feature of global commerce.

• The primary dispute between the United States and Iran concerns whether Iran will have control over the Strait following an end to the fighting.
• Iran has stated its intention to maintain control over the Strait, which gives the regime leverage as well as a potential source of revenue collected as tolls on ships transiting the waterway.
• The United States has strong incentives to prevent Iran from gaining this leverage, since it could undermine the position of the United States and its allies in the region.
• The United States has also traditionally acted in support of freedom of navigation through international waterways. Setting a precedent of Iran controlling Hormuz could have consequences elsewhere.
• There are questions about whether the United States and its allies have the will or capability to force Iran out of the Strait.
• The invention of cheap long-distance drones makes it easy for states and non-state actors to threaten shipping, while anti-drone measures are currently too expensive to adequately counter the threat.

Chokepoints can be partially mitigated with alternative infrastructure built by the Persian Gulf countries.

• Saudi Arabia’s East-West Pipeline, the UAE’s Habshan-Fujairah pipeline, and Iraq’s Kirkuk-Ceyhan pipeline offer alternative routes bypassing the Strait of Hormuz.
• However, this alternative infrastructure is expensive, is unable to fully replace marine transport, and is often subject to other security or geopolitical risks.
• Saudi Arabia’s East-West pipeline is often threatened by Houthi strikes in the Red Sea, the UAE’s port facilities in Fujairah have frequently been targeted by Iran, and the Kirkuk-Ceyhan Pipeline is subject to major disputes between Turkey, Iraq, and the Kurdish semi-autonomous region.
• Nevertheless, the disruption in the Strait of Hormuz has prompted all three countries to pursue investments and diplomatic arrangements to expand these alternative routes.
• The smaller Gulf states of Kuwait, Quatar, and Bahrain do not have the geography to build their own alternative infrastructure, and so remain dependent on the Strait of Hormuz.

The cost of the current disruption has fallen disproportionately on Asia.

• Around 80% of crude and LNG historically transiting the Strait of Hormuz was destined for Asian economies.
• The shockwaves from this crisis have prompted severe economic measures in many Asian countries, including work from home rules, fuel rationing, travel restrictions, and other measures to reduce demand.
• Asian countries also released oil from their Strategic Petroleum Reserves (SPR), helping make up for the shortfall from the Middle East.
• Preparation for this energy shock varies widely.
  • India was caught off guard without an SPR to draw from and therefore had to implement draconian measures to limit the crisis’s impact.
  • China was relatively well prepared for the crisis. In 2025, China purchased enormous volumes of low-cost crude oil to fill its SPR.
  • During this crisis, China banned fuel exports and dramatically lowered crude oil imports. It is believed that China drew down its SPR, largely shielding its economy from the shock.
• Japan, South Korea, and the Southeast Asian countries were also badly hit by the crisis, prompting these countries to look to diversify their energy mix

Marine shippers have been forced to change their methods in response to the current crisis

• While the ceasefire held, two maritime routes emerged through the Strait of Hormuz.
  • The Iranian route runs through Iranian territorial waters which required a “permit” with a rumored price of up to $2 million per ship.
  • The IMO-Oman route runs to the south through Omani territorial waters, where ships are thought to have been quietly guided through the strait by the U.S. Navy during the ceasefire.
• Shippers had to decide which of these two risky options to follow, or else continue piling up losses by remaining in place.
• Shipping risks are being mitigated, though not eliminated, by measures such as turning off AIS transponders – methods which were pioneered by Iranian, Russian, and Venezuelan dark tanker fleets.
• Shipowners have also reportedly begun offering crews large bonuses if they are willing to risk crossing the Strait. Even during periods of increased hostilities, satellite data shows that some ships continue to risk the crossing.
• Despite the breakdown of the U.S.-Iran ceasefire, discussions between Oman and Iran have continued, focusing on the joint management of traffic through the Strait. Such an arrangement would, in effect, hand control of the Strait to Iran.

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Insights for Canada

Canada's Pacific coast energy infrastructure does not rely on any of the world's currently contested chokepoints, positioning Canada as a comparatively low-geopolitical-risk supplier to Asia-Pacific buyers.

• The Trans Mountain Pipeline, LNG Canada, and LPG export projects provide existing infrastructure for Canadian oil and gas exports to reach Asia.
• Asian buyers have already increased their purchases of Canadian energy in response to the current crisis
• Canada cannot be a wholesale replacement for the volumes from the Strait of Hormuz, but it can be a useful avenue for diversification. To capture the moment, west coast energy projects referred to the Major Projects Office may be designated Projects of National Interest and accelerated under the Building Canada Act.
• The G7 Leader’s Statement on June 17th states: “We commit to accelerate the diversification of energy supply routes in order to reduce global vulnerability to the Strait of Hormuz and to increase our energy stocks. We welcome the potential for Canada to deliver significant additional capacity to global markets in the coming years.”

The need to limit global vulnerability to maritime energy chokepoints aligns with Canada’s trade diversification goals, but may be hindered by poor execution.

• In response to trade tensions with the United States, the Government of Canada has set a trade diversification target of doubling non-U.S. exports over the next decade, generating an additional $300 billion in trade in the process.
• Increasing Canadian exports to this level will likely require connecting Canada's abundant energy resources to the enormous energy demand in the Asia-Pacific region.
• Canada’s ability to reinforce the energy security of its international partners, promoting economic growth in the process, will come down to execution
• Proposed regulatory reforms for major projects, including the Major Projects Office and the Building Canada Act, should be aligned with efforts to expand pipeline and port capacity on Canada's West Coast in a timely manner.
• This window of opportunity may close if interested partners lose patience and look elsewhere, or if Persian Gulf countries successfully complete alternative infrastructure projects.

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About the Author

Joe Calnan is Vice President, Energy and Calgary Operations and a Fellow at the Canadian Global Affairs Institute (CGAI). He is also Co-host of CGAI's Energy Security Cubed podcast. He a Nonresident Senior Fellow at the Asia Pacific Foundation of Canada, and an Independent Committee Member of the Bilateral Energy Security Initiative (BESI) at the American Chamber of Commerce in Canada. His research focuses on the intersection between energy, economics, policy, and politics in relation to Canada's role in international energy systems. He frequently appears in major Canadian and international media to provide expertise on energy security and energy trade issues. Joe received a Master's Degree in Public Policy from the University of Calgary with a focus on Canadian energy and natural resources, and also holds a Bachelor of Arts in Western Society and Culture from Concordia University.

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Canadian Global Affairs Institute

The Canadian Global Affairs Institute focuses on the entire range of Canada’s international relations in all its forms including trade investment and international capacity building. Successor to the Canadian Defence and Foreign Affairs Institute (CDFAI, which was established in 2001), the Institute works to inform Canadians about the importance of having a respected and influential voice in those parts of the globe where Canada has significant interests due to trade and investment, origins of Canada’s population, geographic security (and especially security of North America in conjunction with the United States), social development, or the peace and freedom of allied nations. The Institute aims to demonstrate to Canadians the importance of comprehensive foreign, defence and trade policies which both express our values and represent our interests. 

The Institute was created to bridge the gap between what Canadians need to know about Canadian international activities and what they do know. Historically Canadians have tended to look abroad out of a search for markets because Canada depends heavily on foreign trade. In the modern post-Cold War world, however, global security and stability have become the bedrocks of global commerce and the free movement of people, goods and ideas across international boundaries. Canada has striven to open the world since the 1930s and was a driving factor behind the adoption of the main structures which underpin globalization such as the International Monetary Fund, the World Bank, the World Trade Organization and emerging free trade networks connecting dozens of international economies. The Canadian Global Affairs Institute recognizes Canada’s contribution to a globalized world and aims to inform Canadians about Canada’s role in that process and the connection between globalization and security. 

In all its activities the Institute is a charitable, non-partisan, non-advocacy organization that provides a platform for a variety of viewpoints. It is supported financially by the contributions of individuals, foundations, and corporations. Conclusions or opinions expressed in Institute publications and programs are those of the author(s) and do not necessarily reflect the views of Institute staff, fellows, directors, advisors or any individuals or organizations that provide financial support to, or collaborate with, the Institute.

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