Why Canada Doesn’t Have a Strategic Oil Reserve and What Would It Take to Build One?

News Analysis

Ottawa said last week it would do its part to ease upward pressure on oil prices amid the Iran war, but with no strategic reserve and limited capacity to boost production and exports, its impact may be limited.

This has fuelled a long-standing debate about whether Canada, as a major oil producer, should further develop storage and transport infrastructure for domestic stability and economic growth.

Amid conflict in the Middle East and the resulting disruption to the global oil market, Conservative Leader Pierre Poilievre has called on Ottawa to establish a strategic oil reserve. Prime Minister Mark Carney, meanwhile, has responded that Canada, as a net oil exporter, doesn’t need to.

The issue surfaced in recent days after the 32 member countries of the International Energy Agency (IEA), including Canada, on March 11 agreed to release 400 million barrels of oil from their stockpiles.

Energy Minister Tim Hodgson on that day first said that Canada would “do its part” to help boost supply and mitigate the oil shock. At one point in recent days, oil prices had risen by as much as 72 percent since the United States and Israel launched their joint attack on Iran on Feb. 28.

Around 20 percent of the world’s oil supply transits via the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, and Iran has attacked tankers in and around the area.

The IEA requirement to maintain an oil stockpile does not apply to Canada because it is a net exporter of oil. Member countries that are net importers must maintain reserves equivalent to at least 90 days of net imports. Some countries, such as South Korea and Japan, maintain reserves exceeding 200 days.

Hodgson said on March 13 that Canada would contribute 23.6 million barrels of oil to support the IEA’s collective action. Those barrels would be “produced by our industry and co-ordinated with the federal and provincial governments,” the minister said in a statement.

He gave no further information on the matter. The minister’s office said in another statement to media that the additional barrels would come from already planned increases in production in Alberta’s oilsands.

Natural Resources Canada told The Epoch Times that Canada’s contribution would not rely on the deferral of seasonal maintenance at oil sands facilities. “It is based on oil production increases expected to occur over the next 3 to 6 months,” spokesperson Marie Marin said in a statement. Marin added that additional volumes of oil held in private storage could also be exported, while noting Ottawa has not established a target for these additional exports.

Canada produces an average of over 5 million barrels a day, according to federal figures released in December 2025. Annual output has been steadily increasing in recent years.

Carney commented on Canada’s response when speaking to reporters on March 14, while on a visit to Norway. He said Canada has “room to manoeuvre” but added that part of the constraint is increasing production and the lack of pipelines. “That is one reason why we’re working with the province of Alberta,” he said. Ottawa and Alberta signed a memorandum of understanding last year for the potential development of a new bitumen pipeline to the West Coast.

Reserve Call

Poilievre has long called for Ottawa to remove obstacles to greater extraction and export of resources. He wrote a public letter to Carney on March 12 asking for immediate steps to create a “Strategic Energy and Minerals Reserve.”

Poilievre said this would help Canada profit from oil spikes while keeping costs low for consumers and creating jobs.

When speaking of his government’s actions, Carney said the IEA requirement to maintain oil reserves pertains to net importer nations.

“What we do is we provide oil to the global market. We will continue to do so because we are a safe, low risk, low cost, and increasingly, low carbon exporter,” he said.

The Epoch Times asked Natural Resources Canada whether the government had ever studied the possibility of building a strategic oil reserve, but did not receive a response.

The Canadian Association of Petroleum Producers (CAPP) told The Epoch Times in a statement that building such a reserve would require “significant consultation” between different levels of government, and with industry.

CAPP President and CEO Lisa Baiton also cast doubts on Canada’s ability to play a significant role in boosting world oil supplies, as the country is already exporting oil and gas at “record levels.” This is a result of the expansion of the Trans Mountain pipeline and the launch of the first liquefied natural gas export terminal last year, LNG Canada.

“As a result, there is minimal short-term ability for Canadian producers to further increase production in response to supply disruptions arising from the conflict in the Middle East,” Baiton said. “Any meaningful production growth would require additional pipeline and export capacity, which is not available today.”

The latest official data on the Trans Mountain pipeline, the only link between the Alberta oilsands and the B.C. coast, says the pipeline was used at 87 percent capacity in the third quarter of 2025. The pipeline had an average throughput of 777,000 barrels per day during the quarter, for a capacity of 890,000 barrels per day. The pipeline operator declined to provide more recent data.

One energy expert said Canada is not well-placed to help increase the oil supply in the current conditions and recommended against establishing a strategic oil reserve.

“Why would Canada, an exporter, pay to store oil to reduce prices for importers during the periodic oil shocks we all know we face,” Heather Exner-Pirot, a senior fellow and director of Energy, Natural Resources and Environment at the Macdonald-Laurier Institute, said in an X post.

Exner-Piro said this would amount to Canada subsidizing the risk that energy importers take by importing oil from Middle Eastern countries when there should be an incentive for them to buy more oil from Canada. This is something she said they would be “more than willing to do if we actually created policies to get more oil to tidewater.”

US Reserve

The United States has been a net exporter of crude oil and petroleum products since 2020. Its Strategic Petroleum Reserve was established in 1975 during the presidency of Gerald Ford. The reserve was built under circumstances similar to today’s—an armed conflict in the Middle East.

Arab oil-producing countries in 1973–74 had cut off the flow of oil to the United States and its allies to retaliate for its support of Israel in the Yom Kippur War.

Fast-forward to 2026, and the adversaries of that period are now allies of the United States, with Gulf countries being targeted by Iranian missiles and drone attacks.

The U.S. strategic reserve, with a capacity of 714 million barrels, is located in different sites along the coastlines of Texas and Louisiana. The oil is stored in 60 large underground salt caverns with an average diameter of over 60 metres and an average height of about 775 metres.

The reserve oil can be transferred to nearly half of all U.S. refineries through pipelines or tankers, according to the U.S. Department of Energy. As of August 2025, the reserve contained 402 million barrels of oil.

As part of the IEA decision to release 400 million barrels of oil, the U.S. administration on March 11 authorized the release of 172 million barrels from its strategic reserve, a process that will take approximately 120 days to deliver.

Canadian Reserve?

If Canada were to build a strategic oil reserve, it could potentially store the oil in salt caverns, similar to the system used in the United States. Such caverns are currently used to store natural gas, mostly in Saskatchewan. The Canada Energy Regulator says salt caverns account for only 2 percent of the underground storage capacity in the country.

Most underground storage facilities in Canada are depleted oil and gas fields, which are plentiful in Alberta.

One key issue would entail linking the strategic oil reserves to different parts of the country, a problem that exists with or without a reserve. Alberta oil mostly heads to the United States via pipeline. No Canadian oil pipeline moves east from Manitoba to Ontario.

Eastern Canada’s oil supply comes via pipelines from the United States or foreign oil tankers.

The lack of pipelines going east or west is also an issue for increasing supply on the world market to help mitigate an oil shock.

The Alberta government told The Epoch Times that building new pipelines is a priority over establishing a strategic oil reserve.

“While a strategic petroleum reserve may be worth future discussion, our focus should be on building pipelines to the west, east, north, and south to meet the growing demand for our responsibly produced oil,” said the office of Alberta Energy Minister Brian Jean.

The minister’s office added that new pipelines are essential and approvals need to be quicker as the province seeks to increase output to 8 million barrels per day by 2035.

“The best time to build a pipeline was 10 years ago, the next best time is today,” the office said in a statement.

Editor’s note: the article was updated with a statement from Natural Resources Canada.