Iran War Disrupts Global Commodity Markets, Potentially Strengthening Canada’s Position in Upcoming CUSMA Talks

The ongoing conflict involving Iran is sending shockwaves through global trade, pushing up the prices of key commodities such as oil, natural gas, fertilizers and aluminum. As the crisis continues with no clear resolution in sight, the economic ripple effects are beginning to reshape international trade relationships and could influence the upcoming review of the Canada–United States–Mexico Agreement (CUSMA).

One of the most immediate impacts has been seen in energy markets. Crude oil and natural gas prices surged after Iran moved to restrict traffic through the Strait of Hormuz following a bombing campaign involving the United States and Israel. The strait is one of the world’s most critical shipping routes, with roughly 20 percent of global oil supplies typically passing through it. Any disruption there quickly sends energy markets into turmoil.

However, the consequences of the conflict extend far beyond oil and gas. Fertilizer supplies, including potash and other agricultural inputs, are also facing delays and shortages. With planting season approaching in North America, the spike in fertilizer prices is creating significant concern among farmers who rely heavily on these materials for crop production.

American farmers are already dealing with financial pressure caused by rising production costs and declining export sales. These challenges have been partly linked to the trade policies of U.S. President Donald Trump, whose administration imposed tariffs on several international partners. In response to the economic strain on farmers, the government provided financial assistance last year to offset losses linked to tariffs and market disruptions.

Meanwhile, aluminum prices have also jumped since the start of the Iran conflict. The increase is adding further pressure on American industries that were already grappling with the administration’s separate 50-percent tariffs on aluminum imports.

Amid these market disruptions, Canada is emerging as an increasingly important supplier of several essential commodities. The country is a major producer of oil, potash and aluminum, resources that are now in greater demand as global supply chains become less predictable.

According to Fen Osler Hampson, a professor of international affairs at Carleton University in Ottawa, the current crisis may cause U.S. policymakers to reconsider how they view key trading partners. Instead of focusing mainly on tariffs and trade disputes, Washington may begin prioritizing reliable suppliers that can help stabilize markets during geopolitical crises.

Tensions between Canada and the United States have grown in recent months due to tariffs imposed by the Trump administration and controversial remarks suggesting Canada should become part of the United States. In a recent social media post, Trump even referred to Canadian Prime Minister Mark Carney as a “governor,” a comment that added to diplomatic friction between the two countries.

Despite these tensions, Canada and Mexico have been preparing for difficult negotiations over the future of CUSMA, the continental trade pact that replaced NAFTA. The agreement has largely protected both countries from the harshest effects of recent U.S. tariffs.

The upcoming review of the deal will require all three countries to decide whether to renew the agreement for another 16 years, withdraw from it entirely, or maintain it temporarily while continuing negotiations through annual reviews that could last up to a decade.

Before the Iran conflict escalated, the United States held significant leverage heading into the negotiations. Trump’s unpredictable tariff policies created uncertainty for businesses across North America, discouraging investment and leaving Canada and Mexico wary of future trade restrictions.

The U.S. government has also shown it is willing to apply additional pressure. The Department of Justice recently launched an antitrust investigation into fertilizer producers, including Saskatchewan-based company Nutrien, over possible price-fixing and collusion in fertilizer markets. The Saskatchewan government acknowledged the investigation but emphasized that fertilizer prices are determined by global market conditions rather than producer coordination.

Officials in Washington have signaled they are closely watching fertilizer pricing as the Iran conflict affects supply chains. Luke Lindberg, a senior official at the U.S. Department of Agriculture, warned that companies attempting to take advantage of the crisis by raising prices excessively would face scrutiny.

Trade analysts say the global price shock may remind American policymakers how dependent the country remains on international partners. Canada, in particular, plays a crucial role in supplying commodities vital to U.S. industry and agriculture.

Inu Manak, a senior fellow specializing in international trade, noted that stable partnerships are essential during periods of global disruption. She argued that Canada’s role as a reliable supplier of energy, fertilizers and other resources could strengthen its negotiating position in upcoming trade discussions.

At the same time, domestic politics in the United States may also influence the negotiations. The Iran conflict has reportedly been unpopular among many Americans, and with midterm elections approaching in November, the political environment could add further uncertainty to trade policy decisions.

Experts caution that while Canada may gain some leverage from the current situation, tensions and unpredictability in U.S. trade policy are unlikely to disappear anytime soon. As global markets remain volatile and geopolitical risks persist, North American trade partners may face months if not years of continued negotiation and uncertainty.