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## Overview The effective closure of the Strait of Hormuz during the US-Iran conflict in 2026 created significant dislocations in global oil supply chains, generating historic premiums for non-Hormuz crude — most notably Canadian heavy oil shipped to the US Gulf Coast. ## Key Developments - **Canadian Crude Premium**: Canadian oil reached its largest Gulf Coast premium in over two years as buyers sought Hormuz-independent supply alternatives. - **Mechanism**: The Strait of Hormuz is the chokepoint for roughly 20% of global oil trade. Its effective closure forced refiners — particularly Gulf Coast refiners configured for heavy crude — to aggressively bid for Canadian heavy oil via pipeline. - **Ceasefire Impact**: The US-Iran ceasefire announcement caused oil prices to plunge, partially unwinding these premiums, though ceasefire compliance remains contested. ## Strategic Significance **Energy sector**: The episode validates long-standing arguments for Trans Mountain Pipeline expansion and other Canadian export infrastructure. Producers and midstream operators with Gulf Coast connectivity captured exceptional margins. **Geopolitical risk pricing**: The Hormuz premium demonstrates how rapidly physical commodity markets reprice on geopolitical signals. Energy traders and procurement teams should model Hormuz disruption scenarios as a recurring risk. **Legal/contractual**: Long-term crude supply contracts with fixed differentials were severely disadvantaged; spot and index-linked contracts benefited. Future contract drafting in energy should address Hormuz-specific force majeure. ## Watch Items - Whether ceasefire durability causes Canadian crude premiums to collapse - Infrastructure investment decisions by Canadian producers in response to demonstrated Gulf Coast demand - US refinery configuration shifts toward heavier, non-Hormuz crude streams - Potential for similar disruptions if ceasefire collapses