Gas prices in Canada are increasing as oil prices surge, with the average price per liter reaching $1.674 as of midday Tuesday, up by 3.4 cents from the previous week. 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 in the coming days.
The uptick in gas prices is primarily attributed to the escalation of the U.S.-Iran conflict, which has driven oil prices higher. Tensions rose following the breakdown of the ceasefire agreement in the Middle East last week, while Russia’s conflict with Ukraine has also impacted oil supply in recent weeks. Brent crude oil prices reached approximately $86 per barrel early Tuesday, slightly decreasing to just above $84 per barrel midday.
De Haan noted that it typically takes three to five days for gas prices to fully reflect such market shocks. However, given the ongoing volatility in Iran, predicting the final outcome for pump prices remains challenging. If the conflict between the U.S. and Iran persists, further price increases beyond the current week may occur.
In addition to the tensions in the Middle East, disruptions in Russia’s oil infrastructure are contributing to the strain on global oil markets. Recent attacks by Ukraine on Russian oil refineries and storage facilities have significantly impacted Russia’s refining capabilities, leading to a reduction in oil production forecasts. The International Energy Agency has revised down Russia’s oil production estimates by three percent, prompting Russia to ban diesel exports to conserve supply.
The effects of Russia’s oil industry struggles are being felt in Canada, particularly in the Atlantic provinces, where gas prices are rising due to increased demand from Europe following the loss of Russian oil products. Gas prices in Newfoundland and Labrador, Prince Edward Island, and Nova Scotia are notably high, surpassing British Columbia’s prices, which were among the highest in the country earlier in the year due to the Iran war.
Given the current trends, De Haan advises drivers to consider filling up their tanks sooner rather than later to mitigate the impact of rising gas prices.