Supply Chain Shocks: The War's Hidden Costs
The recent agreement between the U.S. and Iran has led to an immediate ceasefire and the lifting of the naval blockade, but it won't solve the structural damage to global supply chains.
The Strait of Hormuz is crucial for transporting $20-25 billion worth of petrochemical products annually, with plastic prices surging to four-year highs due to war-related disruptions. North America is relatively advantaged in terms of feedstock availability, with Canada's petrochemical manufacturing industry valued at $7 billion.
The war has also affected LNG trade, with 20% of global shipments passing through the Strait. Iranian strikes on Qatar's Ras Laffan complex have cut capacity by approximately 17%, with repair timelines of three to five years. Canada is well-positioned to take Asian market share from the Middle East, but infrastructure decisions made in 2026-2027 will determine energy supply patterns for decades.
Other critical shortages brought on by the war include aluminum and helium. The global aluminum market was already heading for a supply deficit of 200,000 tonnes in 2026 before the war, which is now expected to widen to 800,000 tonnes by 2028. Iranian missiles struck two of the Gulf's largest smelters, exacerbating the dynamic. Canada has an angle on this shortage, with more Canadian aluminum finding its way to European markets after a steep tariff was implemented.
The shortage of helium is often overlooked despite its critical links to AI and infrastructure. Helium is co-produced with natural gas, and Qatar's Ras Laffan complex was responsible for a substantial share of global semiconductor-grade helium supply before being damaged by Iranian strikes. Canada has helium resources that would make it the fifth largest in the world.