HSBC analysts discuss why the Canadian Dollar (CAD) has not strengthened significantly despite higher Oil prices, highlighting structural constraints in Canada’s non-US export capacity. They note that limited LNG and crude infrastructure towards Europe and Asia keeps Canadian energy exports largely US-focused and discounted. As a result, HSBC argues USD/CAD remains more sensitive to broad Dollar moves than to Oil dynamics in current conditions.

Oil sensitivity structurally constrained for CAD

“Canada should, in theory, benefit from higher oil via improved terms of trade and energy revenues. In practice, Canada’s ability to monetise global price spikes is constrained by limited liquefied natural gas (LNG) and crude export capacity to Europe and Asia.”

“As a result, a large share of Canadian energy exports remains US‑centric and often trades at a discount, reflecting pipeline bottlenecks and limited west‑coast egress.”

“Moreover, the largest oil spikes are often supply-shock events that coincide with risk aversion and USD strength, which can cap CAD upside.”

“In today’s context, even if a prolonged Strait of Hormuz blockade pushes oil prices sharply higher, the CAD may not benefit much.”

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