As oil prices surge, Canadian gas prices are increasing as well, with factors beyond the Iran conflict influencing the rise, according to an industry expert. The current average price for a liter of gasoline in Canada stands at $1.674 as of midday Tuesday, marking a 3.4-cent uptick from the previous week, as reported by GasBuddy.com.
Patrick De Haan, the chief petroleum analyst at GasBuddy, anticipates further price hikes, projecting an average of $1.70 per liter by day’s end. He foresees Canadian consumers facing additional increases ranging from five to 10 cents per liter in the upcoming days. The escalation in oil prices is primarily attributed to the U.S.’s conflict with Iran, leading to heightened tensions following the breakdown of the Middle East ceasefire agreement. Concurrently, Russia’s conflict with Ukraine has also impacted oil supply in recent weeks.
The price of Brent crude surged to its highest level since June 12, reaching approximately $86 US per barrel early Tuesday before slightly declining to over $84 per barrel by midday. Although these prices exceed the past month’s range, which saw Brent crude dropping to the low $70 US range at times, they remain below the peak levels recorded earlier in the conflict when prices surpassed $110 per barrel.
De Haan notes that gas prices typically take three to five days to fully adjust to market shocks. However, given the volatile and ongoing situation in Iran, predicting the final pump prices remains challenging. He warns that if the conflict between the U.S. and Iran persists, further increases might continue beyond the current week.
In response to the escalating tensions, U.S. President Donald Trump reinstated a blockade on Iranian shipping and initially proposed imposing a 20% fee to secure the critical shipping route through the Strait of Hormuz, responsible for a significant portion of global oil transportation. Additionally, data revealed a decline in tanker traffic through the Strait of Hormuz, raising concerns about potential disruptions to oil supplies.
Meanwhile, disruptions to Russia’s oil infrastructure are compounding the situation. Ukraine has intensified attacks on Russian oil refineries and storage facilities as part of its retaliation against Russia’s actions. This has severely impacted Russia’s refining capacity, affecting the entire oil industry from production to distribution.
The International Energy Agency recently adjusted its forecast for Russian oil production, reducing expectations by three percent due to the ongoing conflict. Russia responded by banning the export of diesel to prioritize domestic supply. These disruptions have led to increased gas prices in Canadian provinces, particularly in the Atlantic region, where the competition with European demand has driven prices up.
GasBuddy’s De Haan highlights that regions like the Maritimes are now facing higher prices due to the competition for gasoline from Europe. Newfoundland and Labrador, Prince Edward Island, and Nova Scotia are experiencing higher gas prices compared to British Columbia, which had previously faced soaring prices due to the Iran conflict. With prices on the rise, De Haan advises drivers to consider filling up sooner to save on costs.
