As oil prices surge once more, Canadians are facing higher costs at gas stations, with additional factors beyond the Iran conflict contributing to the increase, an analyst explains. The average price of a liter of gasoline in Canada has reached $1.674 as of midday on Tuesday, marking a 3.4-cent uptick from the previous week’s average, as reported by the price tracking website GasBuddy.com.
Patrick De Haan, the head of petroleum analysis at GasBuddy, anticipates further price hikes to around $1.70 per liter on average by day’s end, with predictions of increases ranging from five to 10 cents per liter for most Canadians in the upcoming days. The recent escalation in oil prices can be primarily attributed to the U.S.-Iran conflict, which has led to heightened tensions following a breakdown in the Middle East ceasefire agreement from last week. Additionally, the ongoing conflict between Russia and Ukraine has impacted the oil supply in recent weeks.
Brent crude oil prices surged to their highest level since June 12, reaching approximately $86 US per barrel early on Tuesday before slightly dropping to slightly above $84 per barrel by midday. While these prices exceed the levels of the past month when Brent crude was trading in the low-$70 US range, they remain below the peak prices seen earlier in the conflict when they surpassed $110 per barrel.
De Haan notes that gas prices typically take three to five days to fully reflect these shocks, but given the volatile situation with Iran, predicting the final pump prices remains challenging. He warns that if the conflict between the U.S. and Iran continues, further price increases could extend beyond the current week.
The U.S. government, under President Donald Trump, has reinstated a blockade on Iranian shipping and proposed, then retracted, a 20 percent fee for safeguarding the critical Strait of Hormuz, a major oil shipping route. Recent shipping data revealed a decline in tanker traffic through the Strait of Hormuz, raising concerns about potential disruptions to oil supply.
Meanwhile, in Russia, attacks on oil infrastructure by Ukraine have intensified, impacting the country’s refining capacity. This situation has prompted the International Energy Agency to lower its forecast for Russian oil production this year by three percent. Russia has also imposed a ban on diesel exports to preserve its domestic supply.
The effects of Russia’s oil industry disruptions are being felt in Canada, particularly in the Atlantic provinces, where gasoline prices are rising due to increased competition with European demand following the loss of Russian products. This has led to higher gas prices in regions like Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, surpassing the prices in British Columbia, which had previously been among the highest in the country due to the Iran conflict earlier this year.
Given the ongoing price increases, De Haan advises drivers to consider filling up their tanks sooner rather than later to save on fuel costs.