As oil prices surge, Canadian gas prices are also climbing due to various factors beyond the Iran conflict. The average price of gasoline in Canada has reached $1.674 per liter, showing an increase of 3.4 cents from the previous week’s average. Patrick De Haan, the head of petroleum analysis at GasBuddy, anticipates further price hikes to around $1.70 per liter by the end of the day, with potential increases of five to 10 cents per liter for most Canadians in the upcoming days.
The escalation in oil prices can be attributed to the U.S.-Iran tensions, following a breakdown in the Middle East ceasefire agreement last week. Additionally, Russia’s conflict with Ukraine has impacted oil supply in recent weeks. Brent crude prices surged to over $86 per barrel early Tuesday, although they slightly dropped to above $84 per barrel midday, surpassing the levels seen in the past month but remaining below the peak prices during the earlier stages of the war.
De Haan mentions that it typically takes three to five days for gas prices to fully reflect such events. However, the ongoing volatility in Iran makes it challenging to predict the final impact on pump prices. If the U.S. and Iran continue their hostilities, price increases could extend beyond the current week.
The U.S. imposed a blockade on Iranian shipping and proposed a fee to safeguard the critical Strait of Hormuz, which led to disruptions in oil traffic. Meanwhile, Yemen’s Houthis declared a ban on Israeli shipping in the Red Sea, raising concerns about potential further disruptions.
Russia’s oil infrastructure has faced setbacks due to increased strikes by Ukraine on Russian refineries and storage facilities. This has affected Russia’s refining capacity, prompting the International Energy Agency to reduce its Russian oil production forecast by three percent. Russia also banned diesel exports to conserve supply domestically.
De Haan notes that the impact on Russia is particularly affecting the Atlantic provinces in Canada, as they compete with Europe for gasoline availability due to the loss of Russian products. Gas prices in Newfoundland and Labrador, Prince Edward Island, and Nova Scotia have surpassed those in British Columbia, which had previously experienced high prices due to the Iran conflict.
Given the current trends, De Haan advises drivers to consider refilling their tanks sooner to save on potential future price hikes.
