With the ongoing conflict in the Middle East, the Alberta oil industry may see a boost due to the closure of the Strait of Hormuz, where 20% of all petroleum products pass through.This increase in the price of oil would be a welcome boost to the Alberta economy, as the stagnant price of Western Canada Select (WCS) has led to the recent $9.4 billion deficit announced by the government of Alberta..The deficit, while not totally tied to the price of oil, was significantly affected by what the Alberta government called "substantial drops to the price of oil."Western Standard's Will Vasseur covered this in his 2026-27 budget article, citing the significant decline in oil prices as a direct cause of the provincial government's ever-growing deficit."The decline in oil prices translates to a projected $9.8 billion in revenue from bitumen royalties, $3.1 billion lower than 2025 and $7.5 billion lower than 2024."The numbers in this budget are a projection under the assumption that oil prices continue to stagnate, but with the recent events in the Middle East, this assumption may have been premature..The hostiles will not only create disruptions in oil production but also in oil shipments, as after attacks had been launched, Iran announced that the crucial shipping choke point of the Strait of Hormuz will be closed, stopping 20% of all global oil shipments.In the strait itself, three ships have been attacked, leading to even more uncertainty and disruption in the global oil market..On Monday the benchmark for Alberta oil prices, West Texas Intermediate (WTI), jumped by over 5% to more than $73 a barrel, showcasing that the expected increase in oil prices has already moved the markets.The price has now stabilized to around $70 a barrel, but this is still a marked increase in oil prices when compared to prices before the conflict.The Alberta budget this year has an oil price of $60.50 forecasted.This price of oil could continue to climb should the conflict be prolonged, which seems likely as comments from American defence outlets seem to indicate that this will be a weeks-long conflict at a bare minimum.According to the Alberta budget, the price of a barrel of oil was projected to rise to $67 a barrel by 2027, but if conflict in the Middle East continues, this projection may be viewed as preemptive pessimism..In a press conference Monday, Alberta Premier Danielle Smith said that if oil prices continue to rise, the $4.1 billion deficit projected in the 2026-27 budget may be "somewhat less than that."Premier Smith also highlighted this conflict as an example of the need for increased pipelines to expand oil and gas exports."It just underscores the need for our million-barrel-a-day bitumen pipeline to the West Coast, because if this kind of uncertainty continues," the Premier said, "it just demonstrates that the world, our trading partners, and allies need to have a stable source of supply."It is still too early to make any long-term predictions, but early signs like the jump in the price of WTI and the expected long-term closure of the Strait of Hormuz, the conflict in the Middle East may be the change in fortunes the Alberta oil industry needed.
