G7 backs Canada as major global energy supplier to lessen reliance on Strait of Hormuz

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A narrow waterway thousands of kilometres from Canada has pushed the country’s energy resources closer to the centre of global diplomacy. In a June 17 statement, G7 leaders pledged to diversify supply routes away from the Strait of Hormuz and welcomed Canada’s potential to add significant energy capacity to world markets in the coming years.

The endorsement arrived as governments tried to stabilize oil and gas flows after severe Middle East disruptions. It does not mean Canada can replace Gulf supply overnight. It does, however, signal that allies increasingly see Canadian oil, liquefied natural gas, uranium and electricity as part of a longer-term security strategy built around reliable producers and multiple trade routes.

A Rare G7 Endorsement Puts Canada in the Spotlight

G7 communiqués usually speak in broad terms about energy security, stockpiles and market stability. This one went further by naming Canada. After committing to accelerate the diversification of energy routes and increase energy stocks, the leaders specifically welcomed Canada’s ability to deliver additional capacity. The wording matters because it placed Canadian supply inside a collective response to geopolitical risk rather than treating it as a purely domestic economic issue.

The statement also linked energy security to the planned reopening of the Strait of Hormuz. G7 leaders supported a United States–Iran framework and backed a defensive France- and United Kingdom-led initiative intended to reassure commercial shipping, protect merchant vessels and help verify that mines had been removed. Canada’s mention came in that same security context. Still, the careful phrases “potential” and “in coming years” set realistic boundaries: the endorsement recognizes resources and projects that could strengthen global supply, not an emergency shipment capable of immediately filling every disrupted barrel.

Why the Strait of Hormuz Still Shakes the World

The Strait of Hormuz is only about 54 kilometres wide at its narrowest point, yet it carries an outsized share of global energy trade. The International Energy Agency estimates that roughly one-quarter of the world’s seaborne oil trade passed through it in 2025. Major exporters including Iran, Iraq, Kuwait, Qatar and Bahrain depend heavily on the route, while only Saudi Arabia and the United Arab Emirates have substantial operating pipelines that can bypass it.

That concentration turns a regional security crisis into a household economic problem far beyond the Gulf. During the recent disruption, more than 14 million barrels a day of Middle Eastern oil flows were blocked, according to an International Energy Agency assessment reported by Reuters. Oil prices rose sharply, while shipping risk, insurance costs and uncertainty spread through fuel, fertilizer, food and manufacturing supply chains. Even after a preliminary reopening deal, the route remains vulnerable. A reopened strait can calm markets, but it cannot erase the strategic lesson: economies need suppliers whose exports can reach customers through different oceans, pipelines and terminals.

Canada Already Has the Production Base

Canada is not being discussed as a future energy supplier starting from zero. The Canada Energy Regulator ranks it as the world’s fourth-largest crude oil producer, with production reaching a record 5.1 million barrels a day in 2024. Exports then averaged about 4.3 million barrels a day in 2025, another record. Those volumes are large enough to make Canada systemically important to North American energy security and increasingly relevant beyond it.

The existing trade pattern also shows why diversification has become a national priority. In 2025, the United States still accounted for more than 90% of Canada’s hydrocarbon exports and received approximately 63% of all crude oil imported into the U.S. That relationship provides scale, dependable demand and deeply integrated infrastructure, but it also concentrates Canadian exposure in one market. For producers in Alberta, Saskatchewan and offshore Newfoundland and Labrador, the G7 statement strengthens the case for additional routes that can serve Europe and Asia without weakening the long-standing continental trade network.

Trans-Mountain Changed What Canada Can Reach

For years, Canada’s global oil ambitions collided with a physical constraint: most export pipelines pointed south into the United States. The expanded Trans-Mountain system changed that equation when it entered service in May 2024. The project nearly tripled the pipeline’s capacity to about 890,000 barrels a day and increased western Canada’s direct tidewater export capacity by roughly 700%, giving more crude access to tankers at the Westridge Marine Terminal near Vancouver.

The results were visible quickly. The Canada Energy Regulator reported average system utilization of 82% during the first year after the expansion ramped up, with about 23 vessels a month leaving Westridge between June 2024 and July 2025. Canadian crude exports to countries other than the United States more than tripled after startup. Yet the numbers also reveal the limit of Canada’s immediate reach: the regulator estimates roughly 579,000 barrels a day of Trans-Mountain capacity could potentially access global markets after accounting for domestic deliveries, refined products and flows to Washington state. That is meaningful diversification, but modest beside a major Hormuz outage.

LNG Canada Opens a Second Global Energy Lane

Canada’s other major breakthrough came in Kitimat, British Columbia, where LNG Canada loaded its first export cargo in June 2025. The facility is the country’s first large-scale liquefied natural gas terminal and has an initial capacity of about 14 million tonnes a year from two processing trains. Its location on the Pacific gives western Canadian gas producers a direct route to East Asian customers rather than requiring every molecule to move through pipelines into the United States.

The first year was a ramp-up period, but the shift was already measurable. The Canada Energy Regulator recorded average LNG exports of 0.295 billion cubic feet a day in 2025, with all of those volumes going to East Asia after shipments began in June. The human side of that change is easy to miss in national statistics: a tanker leaving Kitimat now represents years of construction, thousands of skilled jobs at peak building activity and a new commercial role for a northern B.C. community in Haisla Nation territory. For G7 partners, it also proves Canada can complete infrastructure that connects its gas reserves to overseas markets.

New Projects Could Turn Endorsement Into Capacity

The next question is whether Canada can build on those first export routes. Ksi Lisims LNG, proposed on the northern British Columbia coast, is designed for 12 million tonnes of annual capacity. In May, Germany’s state-owned SEFE reached an agreement to purchase one million tonnes a year for up to 20 years, with deliveries expected to begin in the early 2030s. The arrangement, which remains subject to a definitive sales contract, was described as Canada’s first long-term LNG supply deal with a European buyer.

Other projects broaden the pipeline, but none offers instant relief. Woodfibre LNG near Squamish is planned at 2.1 million tonnes a year, while a possible second phase at LNG Canada could expand the Kitimat operation if investment and regulatory decisions align. Ksi Lisims must still reach a final investment decision and complete major supporting infrastructure, including a gas pipeline and electrical transmission connection. That gap between commercial interest and operating supply is crucial. The G7 endorsement may help customers, lenders and governments view Canadian projects as strategically valuable, but steel still has to be ordered, power secured, construction completed and long-term contracts finalized before capacity reaches a ship.

Canada’s Energy Value Extends Beyond Oil and Gas

The G7’s reference to additional Canadian capacity was broad enough to fit more than hydrocarbons. Canada produced about 24% of the world’s mined uranium in 2024, making it the second-largest producer, and exported roughly 90% of that output for nuclear power generation. Saskatchewan’s exceptionally high-grade deposits give Canada an important role as countries extend reactor lives, build new nuclear capacity and try to reduce dependence on suppliers exposed to sanctions or political pressure.

Electricity adds another layer, although its export market is currently continental rather than global. About 78% of Canada’s electricity comes from non-emitting sources, led by hydroelectricity and nuclear power. In 2025, Canada exported 32.7 terawatt-hours of electricity to the United States and supplied more than 81% of U.S. electricity imports. These flows cannot be placed on a tanker bound for Europe, but they strengthen the same argument: Canada offers allies a diverse mix of crude oil, natural gas, uranium and low-emission power. That breadth makes the country more valuable than a single-commodity emergency supplier.

A Strategic Opening, Not a Blank Cheque

The G7 statement gives Canada diplomatic momentum, but turning that language into durable influence will require choices at home. New projects need competitive costs, regulatory certainty, infrastructure, environmental performance and meaningful partnerships with Indigenous nations and affected communities. LNG Canada operates in Haisla territory, while the Nisga’a Nation is an owner and development partner in Ksi Lisims. Those relationships do not eliminate disagreement, but they demonstrate why modern energy development depends on more than geology.

Scale remains the final reality check. Canada’s record 2025 crude exports were substantial, yet a large majority still moved to the United States, and direct global oil capacity remains far below the volumes that can be disrupted around Hormuz. New LNG projects also work on multi-year timelines. The G7 therefore did not appoint Canada as the world’s immediate replacement for the Gulf. It identified Canada as one of the trusted countries capable of reducing future concentration risk. That is a significant opportunity—provided Canada can convert resources, political support and proposed projects into reliable supply.

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