A second chokepoint risk has entered the oil market alongside the Strait of Hormuz disruption that has run since spring. Houthi forces damaged a section of the pipeline that moves Saudi crude from the eastern fields to the Red Sea coast this week, a route that industry estimates suggest could remove as much as 4 percent of global oil supply if repairs take time. West Texas Intermediate jumped 4.4 percent to 105.83 dollars a barrel on September 15 before easing back after reports that Saudi Arabia began rerouting shipments through Oman.
Hopeful on Iran, Escalating Elsewhere
President Trump said this week he believes the broader Iran war may be nearing an end, telling reporters that Iranian officials want to negotiate. The signal matters because a ceasefire framework agreed in June already called for the Strait of Hormuz to reopen fully, a step that has not happened. Iran has continued limiting vessel passage and charging tolls, according to tracking cited by regional media, even as both sides have violated the broader truce repeatedly. At the same time, fighting between Saudi Arabia and Iran backed Houthi forces in Yemen intensified, with Saudi forces conducting roughly 450 airstrikes in a single week and the Houthis striking Saudi targets including the Red Sea port of Yanbu. The tail risk here is not that Hormuz stays closed. It is that a second, less tracked chokepoint opens while attention stays fixed on the first one.
WTI has held above 90 dollars a barrel for more than two weeks and spiked past 105 dollars on September 15 after Houthi forces damaged a Saudi pipeline that carries a meaningful share of global oil supply, a second chokepoint risk layering onto the Hormuz disruption that has run since spring.
WTI has traded above 90 dollars a barrel since September 1 and briefly topped 105 dollars after Houthi strikes damaged a Saudi pipeline carrying up to 4 percent of global supply. Source: Investing.com daily settlement data.
Canada Is Exposed on Both Sides of This Trade
The mechanism connecting this conflict to Canadian portfolios runs in two directions that partly offset. As an importer, Canada is exposed like every other economy because oil is a globally priced commodity: a Hormuz or Red Sea shock lifts pump prices in Toronto as readily as in Tokyo, and Canada is the only G7 country without a strategic petroleum reserve to soften a sudden supply gap. As a producer, the same shock is a tailwind for Canadian heavy crude. Asian refiners seeking alternatives to threatened Gulf supply have grown willing to pay a premium for Canadian barrels, and the Trans Mountain Expansion pipeline, now moving roughly 890,000 barrels a day, gives that crude a route to Japan, South Korea and China that never touches the Strait of Hormuz or the Red Sea at all. Canadian energy equities are one of the few parts of the market where this conflict is not simply a cost.