As oil prices surge once more, Canadian gas prices are following suit, with increases not solely attributable to the Iran conflict, an analyst explains. The current average price for a liter of gasoline in Canada stands at $1.674 as of midday Tuesday, reflecting a 3.4-cent uptick from the previous week’s average, as reported by the price monitoring website GasBuddy.com.
Patrick De Haan, the head of petroleum analysis at GasBuddy, anticipates a further rise in prices to around $1.70 on average by day’s end, with most Canadians likely to witness price hikes ranging from five to 10 cents per liter in the upcoming days. The escalation in oil prices, driven by the U.S.-Iran tensions, has been a key factor, exacerbated by recent disruptions in the Middle East due to a breakdown in agreements and the ongoing Russia-Ukraine conflict.
Brent crude, reaching its highest level since before the U.S.-Iran hostilities ceased, surged to about $86 US per barrel early Tuesday before moderating slightly to slightly above $84 per barrel by midday. While these prices surpass those of the past month, which saw Brent crude at lows in the low-$70 US range, they remain below the peak levels witnessed during the earlier stages of the war, surpassing $110 per barrel.
De Haan notes that gas prices typically take three to five days to fully reflect market shocks. Given the volatile situation in Iran, the analyst cautions that predicting the final outcome for pump prices remains challenging. Continuing U.S.-Iran hostilities could lead to sustained price increases beyond the current week.
Meanwhile, disruptions in Russia’s oil infrastructure are compounding market tensions. Ukraine’s intensified strikes on Russian refineries and storage facilities are part of its response to the ongoing conflict with Russia. This has notably impacted Russia’s refining capacity, affecting its ability to produce lighter products like fuels, according to Josephine Mills, a senior analyst at Enverus.
In response to these challenges, the International Energy Agency has revised down its forecast for Russia’s oil production by three percent, prompting Russia to halt diesel exports to preserve domestic supply. These developments are contributing to the upward pressure on gas prices.
De Haan highlights that the repercussions from Russia are particularly evident in the Atlantic provinces of Canada, where heightened demand driven by European competition for Russian products is pushing prices up. In the Maritimes, increased competition for gasoline availability is translating into higher prices.
Gas prices in Newfoundland and Labrador have surged to an average of $1.934 per liter, closely followed by Prince Edward Island at $1.883 and Nova Scotia at $1.840. These prices now surpass those in British Columbia, which had previously experienced some of the highest gas prices in the country due to the Iran conflict earlier this year.
Given the escalating prices, De Haan advises drivers looking to save money to consider refueling sooner rather than later.