For the first time since its onset, the West has an ally in the oil war against Saudi Arabia and Russia.
A new player enters the new “Oil War”, one that might help the crude-deprived West and rebound the US’s position in this undeclared conflict. Canada, the world’s second-largest country and possibly the closest US ally on the planet, is revamping its oil exports.
Canada has the world’s third-largest proven reserves of crude oil. This statistic is often deceiving, as having large reserves does not necessarily entail a primary position in the global crude market. Venezuela, for example, has the largest reserves in the world but ranks only 12th in oil production and 22nd in exports.
The utility of a country’s oil reserves is calculated according to many factors. Large internal demand, for example, hampers exports to the outside world. The United States, with its 331 million inhabitants and large industrial basins, ranks first in global oil production despite its relatively poor reserves.
Saudi Arabia, on the other hand, has a mostly barren landscape and a smaller population than Morocco, allowing large oil exports from the country.
In fact, Saudi Arabia’s grip on global crude exports is so firm that a decline changes the entire balance of world markets. In accordance with Russia, this is exactly what Saudi Arabia has been doing since July, massively increasing oil prices in the West.
The West has been largely unable to counteract the Saudi threat, until now.
A new ally
Despite its massive reserves, Canada is anything but a petrostate, unlike Saudi Arabia and Russia. A “petrostate” is a nation whose economy relies mainly on fossil fuel exports.
From the United States’ point of view, Canada is a complacent ally with a small population and many natural resources ready to be exploited. Similar to what Russia has become for China following the war in Ukraine.
Canada’s oil passes through the United States and is loaded on cargo ships in Texas before entering the world market. Without the US, Canada would have little to no capability of exporting oil.
Furthermore, Canada’s oil is a favorite of American fuelmakers. Texan refineries make gasoline out of Canada’s crude before exporting it using the same ports.
Following tensions between the US and the Saudi-led Organization of Petroleum Exporting Countries (OPEC), it is no surprise that Canada ramped up its exports. According to sources familiar with the matter, Canada’s oil exports will increase six-fold in November from September levels.
This deal is beneficial for both countries. The US obtains an advantage in the oil war, while Canada receives a significant cash flow to peacefully support its economy.
For the first time since its onset, the West does not look desperate in the new oil war.
