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Brent crude is hovering near $100 per barrel, equity markets are at all-time highs and a peace proposal over the Strait of Hormuz has already knocked $10 off the price of crude in a single session. Yet the fundamental supply picture has not changed, and the disconnect between market pricing and physical risk is one of the most important signals we are watching right now. At the Enverus EVOLVE conference in Houston in early May, we met with U.S. Assistant Energy Secretary Kyle Haustveit to share our read on what the crisis means for global supply and why Canada is in a uniquely powerful position to act.
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The Market Is Fading the Crisis. We Think That Is a Mistake.
Brent crude near $100/barrel sounds elevated until you compare it against where the energy community expects prices to go. The forecast range we heard most often at the conference was $150 to $180 per barrel if the Strait of Hormuz disruption escalates materially. The gap between today’s price and that range is not evidence that the risk has passed; it is evidence that the market is choosing to fade it. Equity markets reinforcing that view by reaching all-time highs only adds to the cognitive dissonance.
The cleaner signal is in physical inventories. We received reports recently of another substantial stock draw, which is consistent with a market running tighter than suggested by headlines.
When stock draws and flat-to-rising prices coexist, it typically means demand is absorbing supply faster than is being priced in. Our read is that the market is anchoring on diplomatic noise rather than physical flows, and that is where the mispricing sits.
Supply Guardrails Are Quietly Eroding
Two developments deserve more attention than they are getting. First, the United Arab Emirates has left OPEC, introducing real uncertainty about the cohesion of the group’s production framework going forward. Second, credible concerns exist that OPEC spare capacity could face material challenges returning online in a post-conflict scenario. These are structural constraints, not short-cycle inventory adjustments, and they compound the stock-and-flow problem we already observe.
As a result, a geopolitical premium is likely to be baked into oil for some time, even after the current Strait of Hormuz standoff resolves. Countries that held minimal strategic reserves during this period will move aggressively to rebuild security of supply. That means forward demand for physical barrels will be higher, and producers with exportable surplus are in a structurally stronger negotiating position than they were 12 months ago.
Iran, Enrichment and the Feedback Loop Nobody Wants
The core policy question circulating in Houston is how President Trump’s government balances its energy affordability mandate against the hard reality that the Strait remains largely closed. The Assistant Energy Secretary is aware that $100 Brent is inflationary, and prices materially above that would apply significant pressure to the broader U.S. economic narrative going into the summer driving season. That tension is real. That said, Iran cannot have a nuclear weapon.
What the market may be underweighting is the asymmetry here. If a durable ceasefire agreement is reached, prices ease and producers absorb some margin compression. If negotiations collapse, the strait’s disruption is prolonged, the path to $150 becomes much shorter. The peace proposal that briefly pulled $10 off the price illustrates how sensitive markets are to headline flow, but it also shows how quickly that move can reverse if the underlying situation does not resolve. We believe the market is priced for a soft landing, one that is not yet assured in our view.
Canadian Energy Is Having Its Moment. The Window to Act Is Now.
The sentiment in Houston toward Canadian energy was notably constructive. Shell’s acquisition of ARC Resources, Enbridge’s expansion of Sunrise pipeline capacity, the reauthorization of Enbridge approvals and the presidential permit for the Bridger pipeline collectively signal that, despite the political volatility of the past 18 months, Canadian barrels remain deeply welcome in the U.S. market. These are not minor deals. They represent a sustained and material commitment to North American supply integration at a time when the rest of the world is scrambling for secure energy.
Our view is that Prime Minister Mark Carney and the premiers, including Alberta’s Danielle Smith, have an opening that is as clear as it has been in a generation. Canada has the resource, the infrastructure momentum and now the geopolitical context to make the case for accelerated energy project approvals. The Hormuz crisis has done what years of advocacy could not: It has made energy security the dominant frame for every conversation in the room. That frame favors Canada, but only if the institutional will to act matches the opportunity in front of it.
The Case for West Coast Optionality Remains Intact
Even with expanded north-south pipeline capacity to the U.S., the case for a second West Coast pipeline route remains strong. Asian energy demand is persistently underestimated in our forecasting and, frankly, in most industry models. Every cycle, we revise consumption figures higher for the region. The structural drivers of that demand, mainly industrialization, population growth and now AI-driven data center expansion, are not going away. Another West Coast route gives Canadian producers access to that demand directly, without relying entirely on the U.S. as the predominant buyer.
The post-conflict environment in the Strait of Hormuz will also reshape procurement strategies across Asia. Countries exposed to shortages during this period will seek to diversify their supply sources, creating durable demand for reliable non-Middle Eastern barrels. Optionality in export routing is not a luxury; in the current environment, it is a risk management imperative. We would argue there has never been a stronger fundamental case for completing West Coast infrastructure than there is today.
Key Takeaways:
Why is Brent near $100 if the energy community expects prices between $150 and $180?
The gap reflects a market that is currently pricing diplomatic hope rather than physical fundamentals. Stock draws are accelerating, OPEC’s structural cohesion is under pressure following the UAE’s exit, and spare capacity concerns are real. We believe the market is anchored on the peace proposal narrative rather than on the underlying stock-and-flow data, which points to a tighter supply position than current prices imply.
What factors are preventing a more immediate price response to the Strait of Hormuz crisis?
Three factors are doing the most work: equity market resilience at all-time highs signals broader demand destruction is not yet priced in; the U.S. administration’s stated focus on energy affordability is creating a policy signal that dampens upward price expectations; and short-term diplomatic activity, including the current peace proposal, gives the market a reason to stay cautious about chasing upside. None of these factors resolve the physical tightness we are observing, but they are sufficient to keep prices from moving aggressively higher in the near term.
Why does Canadian energy infrastructure remain a priority even as north-south pipeline capacity grows?
Because buyer concentration is itself a risk. Expanded capacity to the U.S. is a net positive, but it does not resolve Canada’s exposure to a single counterparty. Asian demand has consistently surprised to the upside in our models, and the structural appetite for secure non-Middle Eastern supply will only intensify as the Hormuz situation plays out. A second West Coast export route transforms Canada from a price-taker in the North American market into a price-setter with genuine global optionality. That distinction will matter more, not less, as global supply guardrails erode.
About Enverus Intelligence® | Research, Inc. (EIR)
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies, and capital providers worldwide. See additional disclosures here.
