Gas prices have slightly risen in Canada due to the North American oil market responding to heightened tensions in the Middle East. The joint U.S. and Israeli attack on Iran has raised concerns about disruptions in the oil supply chain, particularly through the vital Strait of Hormuz. Experts suggest that elevated gas prices may persist as long as the conflict hampers oil tanker movements in the region.
The duration of any potential closure of the Strait of Hormuz is crucial for market impact, with shorter disruptions being manageable blips but longer closures posing more serious consequences. Canadian oil markets could benefit from the increased prices, as Canada’s stability amid geopolitical turmoil is attractive to buyers.
By midday on Monday, Brent crude prices reached $78.04 US before settling at $75.79 US, while West Texas Intermediate crude stood at $70.60 US. Retail pump prices in Canada rose to 135.3 cents per litre, higher than a month ago but lower than prices a year earlier.
Although there have been no immediate disruptions to oil supply, the U.S.-Iran conflict could lead to heightened volatility and increased premiums due to geopolitical risks. Any threats to Iran’s oil production or sustained shipping disruptions could further drive up gas prices.
The Strait of Hormuz plays a critical role in global oil trade, with about 20% of the world’s crude oil passing through this narrow waterway. Recent incidents in the strait, including attacks on oil tankers, have led to preventive measures by commercial vessels, causing a significant reduction in oil supply reaching markets.
Analysts warn that unless the conflict deescalates, the impact on oil supply could lead to sustained higher prices. The evolving geopolitical landscape may continue to exert upward pressure on gasoline prices in the coming week.