As oil prices surge once more, Canadian gas prices are also rebounding, with various factors influencing the increase beyond the Iran conflict, as per an analyst.
The current average cost of a liter of gas in Canada stands at $1.674 as of midday Tuesday, marking a 3.4-cent uptick from the previous week’s average, notes data from GasBuddy.com. Patrick De Haan, head of petroleum analysis at GasBuddy, anticipates further price rises to around $1.70 per liter on average by day end.
De Haan foresees most Canadians facing price hikes ranging between five to 10 cents per liter in the upcoming days. The escalation in oil prices can be attributed to the U.S.’s conflict with Iran, which has led to increased tensions post a breakdown in the Middle East ceasefire agreement last week, alongside Russia’s ongoing conflict with Ukraine, impacting supply over recent weeks.
Brent crude reached its highest level since before the U.S.-Iran ceasefire on Tuesday, touching about $86 US per barrel before slightly dropping to slightly above $84 per barrel midday. Although these prices exceed the past month’s range, when Brent crude hit lows in the low-$70 US range, it remains below the peaks witnessed earlier in the conflict, surpassing $110 per barrel.
De Haan mentions that gas prices typically take three to five days to fully reflect market shocks. However, given the volatile situation in Iran, predicting the final pump prices remains challenging. He notes that if the U.S. and Iran continue their hostilities, further price increases might extend beyond the current week.
Meanwhile, disruptions in Russia’s oil infrastructure are compounding the situation. Recent strikes by Ukraine on Russian refineries and storage facilities are straining Russia’s refining capacity, affecting the oil-to-fuel conversion process and impacting the entire oil industry, according to Josephine Mills, a senior analyst at Enverus. As a consequence, the International Energy Agency has revised down Russia’s oil production expectations for this year by three percent. Russia has also halted diesel exports to preserve supply domestically.
De Haan indicates that the impact of these events on Russia is significantly affecting the Atlantic provinces in Canada, particularly due to heightened competition with Europe for gas products originating from Russia. This competition is leading to higher gas prices in regions like the Maritimes, which are now having to pay more to secure gasoline volumes due to the loss of Russian supplies in Europe.
Gas prices in Newfoundland and Labrador, Prince Edward Island, and Nova Scotia are notably higher than British Columbia’s prices, which were previously elevated due to the Iran conflict earlier this year. With prices trending upwards, De Haan advises drivers looking to save money to consider refilling their tanks sooner rather than later.
