In this week’s The Seven…

• The Iran crisis - No end in sight
• Food security - Impacts of the Iran war 
• Northern pivot - Canadian crude looks favourable
• Interesting Fact - Feeding the world - The Haber-Bosch process 
• Chart of the Week - The (labour) market rebalancing act of 2026

It’s halfway around the world, but the war in Iran is having clear impacts here at home. WTI oil prices closed yesterday at US$96/bbl, up from pre-war levels of around US$65/bbl. Gasoline prices have increased. The S&P 500 stock market index sank lower this week on fears the conflict will slow the global economy.

Last week, we discussed a few scenarios for Alberta’s economy. Higher oil prices will lead to higher incomes (primarily via higher producer and government revenue). That’s a given. But the impact on employment and investment is far less clear. Even in this more optimistic scenario, we don’t expect a surge in oil and gas investment, which is far less sensitive to oil prices than in the past. Limited pipeline capacity remains a key constraint. We need another 1-2 weeks to monitor the situation before finalizing our forecast. Stay tuned.

It’s not just energy costs. Fertilizer prices have surged since the war, squeezing margins for agriculture producers. It will take time, but ultimately consumers pay the price from lower yields and higher input costs - all at a time when food inflation in Canada remains stubbornly high.

Global energy and food security are back in the spotlight. Canada should be front and centre, as the fourth largest producer of crude oil, fifth largest producer of natural gas, the largest producer of potash, the largest producer of canola and a top ten producer of wheat.

As the world searches for new supply, Canada looks like a safe bet - a secure, reliable and democratic supplier. But Canada can only do so much in the near term. This week the International Energy Agency agreed to release inventories to ease the oil price burden, and the U.S. is even lifting sanctions on Russian oil. Canadian oil producers say they can do little to ramp up production in the short run due to pipeline constraints.

Not just energy - Food security concerns mount

When the war in Iran started, all eyes were on the crude oil market. With a fifth of global oil flowing through the Strait of Hormuz, it was not surprising to see WTI oil prices spike above $US100 per barrel earlier in the week.

Less talked about is food and, in particular, the critical ingredient to produce food - fertilizer (see our Interesting Fact below).

The Strait of Hormuz is a critical chokepoint for 30% of global urea (nitrogen) exports and a significant portion of the world's sulphur, which is essential for phosphate production.

Within two weeks of the conflict starting, benchmark urea prices have surged about 30% since the start of the conflict.  

The timing is unfortunate for at least three reasons: 1) the price spike comes at a time when the fertilizer market was already tight and prices were rising, in part due to Chinese export controls and underutilized European fertilizer plants. 2) It coincides with the spring seeding season when fertilizer is in high demand. 3) Unlike 2022, when high grain prices helped offset expensive inputs, 2026 grain prices haven’t moved nearly as much. A massive "Hormuz premium" will eat directly into crop margins.

The ultimate impact depends on duration. If the Strait remains blocked through late April, key spring shipments for the Northern Hemisphere will be missed entirely, potentially making the supply shortage structural for the 2026 season. Even after a reopening, it could take 1-2 months to normalize global flows.

For the individual farmer, the impact depends on whether fertilizer was pre-purchased.  Eventually, however, fertilizer stocks may need to be replenished at higher cost.

Farm Credit Canada estimates that a 40% increase in nitrogen fertilizer costs could cut farming margins for a wheat/canola rotation in Saskatchewan in half to about $25/acre (fertilizer costs account for roughly 20-25% of total growing costs for these crops).

Eastern Canadian farmers are most vulnerable. The West is self-sufficient for nitrogen fertilizers with major plants located in Alberta and Saskatchewan. However, while western Canadian farmers have local supply, they will still have a higher price reflecting global market conditions. There are few options. Producers could attempt to rotate into crops like peas/lentils with lower fertilizer requirements. Or they can reduce fertilizer, but at the cost of lower yields.

I discussed the fertilizer price spike on BNN Bloomberg yesterday, and what it means for agriculture producers and food security.

Northern Pivot - Canadian crude gains favour in Asia

Our ATB Cormark Capital Markets team has done a great job covering the situation in the Middle East and the impact on oil markets. One key insight is that the Strait of Hormuz blockage has disrupted heavy, high-sulfur barrels - similar in quality to what the Canadian oil sands produces. As a result, Asian refineries are willing to pay a premium for Canadian crude.

As Managing Director Patrick O’Rourke notes, this is shifting the focus back to Canada as a safe haven: “Where we see some opportunity for Canada is in a re-rating of the assets of the companies…We’re seen as consistent safe haven, stable jurisdiction.”

The main constraint? Limited egress to Asia. The Trans Mountain Expansion resulted in a surge of crude shipments from the B.C. coast, but it’s nearing full capacity.

Interesting Fact: Feeding the world - The Haber-Bosch process

A major breakthrough that transformed global agriculture is known as the Haber-Bosch process. Before this discovery, the world relied on limited natural sources of nitrogen—like manure and bird and bat droppings (guano)—to fertilize crops. As the global population grew at the end of the 19th century, scientists feared a "nitrogen famine" that would lead to mass starvation.

In 1909, German chemist Fritz Haber successfully demonstrated a method to pull nitrogen from the air. A few years later, Carl Bosch, an engineer, scaled this laboratory experiment into an industrial powerhouse.

Today, the Haber-Bosch process uses natural gas as a source of hydrogen, which is then combined with atmospheric nitrogen under high pressure and intense heat over an iron catalyst to create ammonia.

Some estimate that without this process, we could only feed half the world’s population. So, yeah, pretty important.

Chart of the Week - The (labour) rebalancing act of 2026

Early this morning, we dove into February’s labour market report. Quick summary: A tough month for Canada (largest monthly job decline in four years), but Alberta held steady.  Looking at longer-term trends, Alberta employment continues to outperform.

For the Chart of the Week, we present a puzzle for you to solve.

Observation: Until recently, Alberta’s unemployment rate had been stubbornly high, sitting above the national rate. At the same time, Alberta’s employment growth has exceeded Canada’s, on a year-over-year basis, every month since September 2023.

Question: What’s going on?

Now that you’ve had a minute to think about it, read on…

Alberta was adding jobs, just not at the pace people were looking for work.

It ultimately ties back to Alberta’s much faster population growth than the rest of the country - propelled by interprovincial migration. The challenge for Alberta’s labour market was to absorb massive inflows of people entering the labour market.

But lately there has been a shift. Job growth has continued at a similar rate, but population growth has slowed and with it the labour force (people working or looking for work).

The result? The unemployment rate has fallen from its recent peak of 8.2% in August 2025 to 6.3% today - now sitting below the national rate of 6.7%

In short, the story was more jobs, but even more people. Now the story is more people, but even more jobs. The labour market rebalancing act is underway.

Answer to the previous trivia question: The horror film “Friday the 13th” premiered in 1980.

Today’s trivia question: What is the Ides of March (March 15) best known for (other than the title of an awesome song by Iron Maiden and a 2011 movie starring, among others, George Clooney)?