Ontario ready to cut off electricity, critical minerals to US amid trade war
Ontario Premier Doug Ford has threatened to cut off electricity and critical minerals to the United States in response to Trump’s threats to add new tariffs on Canadian autos and steel.
Ford said he will begin cutting off electricity and critical minerals produced in Ontario if the trade war with the US continues to escalate, in an interview with the Associated Press.
Michigan receives about 6% of its electricity from Ontario. Four international transmission lines connect Michigan and Ontario, with a total transfer capacity of 2,000 megawatts.
If Trump continues trying to attack Canadian manufacturing, Ford said, “he better have a pack of batteries,” the Associated Press reported.
This is not the first time Ford has used critical minerals and energy as a threat in the trade war. In October 2025, he told the Financial Post that the Canadian constitution gives provinces jurisdiction over critical minerals.
“We have the right to make sure that the people that buy our critical minerals are friends,” he said at the time.
The news comes after Prime Minister Mark Carney walked away from trade negotiations on Friday, and Trump imposed 50% tariffs on about $20 billion worth of Canadian goods including autos, auto parts and steel on Saturday, and Carney said Canada would retaliate dollar-for-dollar beginning Sept. 8.
Critical Minerals
As the US aims to reduce their reliance on China for critical minerals, losing Canadian production of high-grade nickel and uranium could become a major problem for the country.
Canada exported $28.8 billion worth of critical minerals to the United States in 2025, accounting for approximately 57% of Canada’s total critical minerals, according to Natural Resources Canada.
Ontario’s Sudbury Basin, home to Vale (NYSE: VALE) and Glencore (LSE: GLEN) operations, is one of the world’s largest nickel-producing regions. Nickel is used in stainless steel, electric-vehicle batteries and defence applications, including military aircraft and naval vessels.
“What would they do without the high-grade nickel that we ship down to the U.S.?” Ford said to the Associated Press.
Cameco’s (TSX: CCO; NYSE: CCJ) Blind River refinery in northern Ontario is the world’s largest commercial uranium refining facility. The province’s Ring of Fire region contains chromite, cobalt, nickel, copper, titanium and platinum group elements.
Energy cut off
Ford also threatened again to cut off energy produced in Ontario that powers homes and business in the US, if Trump continues to intensify the trade war.
He had already used energy as a threat, imposing a 25% surcharge on electricity exported to Michigan, Minnesota and New York in March of 2025. Trump then threatened to double tariffs on Canadian steel and aluminium, and both sides backed away.
“We power 1.5 million homes and businesses,” Ford told the Associated Press. “Everything’s on the table. I’ll do whatever it takes.”
Still, Ford said to the Associated Press that Canada shouldn’t stop negotiating, even if he is ready to retaliate when needed.
“I never believe in walking away from the table,” Ford said. “Continue negotiating and see where we go.”
U.S. Refiners Face New Crude Squeeze as Canada Cuts Oil Sands Output
- Canadian oil sands maintenance could cut crude production by 300,000 bpd in September, squeezing U.S. refiners already operating hard to offset disrupted global fuel supplies.
- Replacement heavy crude is scarce, with Canadian inventories unusually low and Venezuela’s production recovery progressing too slowly to fully compensate.
- The squeeze could push already-record refining margins even higher, particularly for diesel, adding further pressure to fuel prices, inflation and economic growth.
U.S. refineries have been running at full speed for months to make up for lost fuel supply from the Middle East. Fuel exports from the United States have been breaking records. This may be about to change, and not because of the war. It is oil sands maintenance season in Canada.
In September, Canadian crude oil production may drop by 300,000 barrels daily due to maintenance activities in the oil sands, Rystad Energy said this week, as quoted by Bloomberg. Usually, whenever such a seasonal disruption occurs, it gets offset with crude from storage. Unfortunately, crude in storage is also lower than usual—the lowest in 12 months, per the report.
Normally, Canadian oil producers send 4 million barrels daily of heavy crude to U.S. refiners. Next month, there will be less, which will be felt because demand for fuels remains strong despite some demand destruction by higher prices. According to the Bloomberg report, all major oil sands operators will be cutting production for maintenance, and pipeline operators have stopped rationing space on their pipes in evidence they expect lower demand in September.
The problem is there is no replacement for Canadian crude, even with oil shipments from Venezuela ramping up—because they are not ramping up fast enough. Venezuela exported 1.16 million barrels of crude oil daily last month, a slight decline from June’s 1.2 million barrels daily, because PDVSA withdrew less crude from storage, according to a Reuters report from earlier this month.
The fact that Venezuela is drawing on inventories to cover export demand suggests production has yet to pick up meaningfully. Indeed, July exports to Venezuela’s biggest oil destination, the United States, averaged 786,000 barrels daily, which was the highest since early 2019, and up from 284,000 barrels daily in January 2026, before the U.S. federal government sent forces to Caracas to remove President Nicolas Maduro and establish U.S. control over the South American country’s oil industry.
All in all, it appears the recovery in Venezuela’s oil production has been progressing more slowly than hoped, with all the supermajors that used to operate in the country wary and taking their time to make the decision whether to return. There have been some deals signed in recent months, with service providers and smaller American oil companies, which seem more willing to take the risks of operating in the country, which has yet to see a stable political and fiscal environment for large-scale operations.
Meanwhile, the situation in the Middle East is not improving, despite claims from Washington that tanker traffic has normalized, which tanker-tracking companies have not been able to verify, per a recent Wall Street Journal report. Ukrainian drone attacks on Russian refineries continue, squeezing gasoline and diesel production there as well. Global fuel supply remains constrained, especially in diesel, which caused refining margins to hit all-time highs earlier this month. The diesel crack spread hit $100 per barrel for the first time in history in mid-August.
Now, with 300,000 barrels daily of Canadian crude about to go offline in September, this record might yet get broken, just when demand for fuels picks up ahead of the heating season, when it hits a seasonal high. If the fuel supply balance remains compromised, there will be further demand destruction, starting from the most vulnerable markets and later spreading to the more resilient ones. This will in turn have implications for economic growth and inflation.
There can be little doubt that the Middle East war will drive higher inflation across the globe as it moves closer to its seventh month, with no resolution in sight and more escalation as the United States has just widened its sanctions against Iran.
By Irina Slav for Oilprice.com
No comments:
Post a Comment