Gas prices in Canada have slightly increased due to the North American oil market’s reaction to heightened tensions in the Middle East. The U.S. and Israel jointly attacked Iran, raising concerns about the region’s stability. Experts suggest that as long as the conflict disrupts oil tankers’ access to the vital Strait of Hormuz shipping route, gas prices may remain elevated.
Rory Johnston, an oil markets researcher based in Toronto, emphasized the significance of the duration of the Strait’s closure in influencing market trends. He mentioned that Canada’s oil industry often benefits from price surges during geopolitical uncertainties, given the country’s perceived stability.
As of 12:30 p.m. ET on Monday, Brent crude oil prices reached $78.04 US before settling at $75.79 US, while West Texas Intermediate crude stood at $70.60 US by midday.
Retail pump prices in Canada rose to 135.3 cents per litre by Monday morning, higher than the previous month but lower than a year ago. Despite no immediate supply disruptions, potential volatility and increased premiums could result from the U.S.-Iran conflict, according to Patrick De Haan, head of petroleum analysis at GasBuddy.
The conflict’s impact on Iran’s oil production and shipping disruptions could further drive up gas prices. De Haan highlighted the likelihood of increased upward pressure on gasoline prices in the coming week amidst evolving geopolitical dynamics.
The Strait of Hormuz plays a crucial role in global oil trade, with about 20% of the world’s crude oil passing through it. Iran’s warnings to shippers in the strait have raised concerns, as any sustained disruption could significantly affect global oil supply. Recent incidents involving oil tankers in the strait have added to the tensions, leading to a significant reduction in crude oil reaching the market.
Jorge Leon, a senior executive at Rystad Energy, emphasized the strait’s importance as a critical oil chokepoint and highlighted the potential loss of global crude oil supply if disruptions continue. The conflict’s escalation could sustain higher oil prices unless tensions are de-escalated.