Gas prices in Canada are expected to start out climbing again as any progress made towards a peace deal between the U.S. and Iran appears to be unravelling.
Consumers should expect to “dig a little bit deeper” into their wallets, in response to a gas price expert.
“A rude slap to the face to start out the work week is that the trade deal is now off the table, and we’re sort of back at it. Ground zero starting throughout, and the U.S. is just not any closer to a peace deal than it was per week and a half ago,” says petroleum analyst Patrick De Haan at GasBuddy.
Global oil markets have been surging ever since shipping traffic was virtually halted within the Strait of Hormuz when the conflict began at the top of February.
Prices for consumer gasoline saw some relief over the past few weeks as a peace deal was reportedly being negotiated, which raised hopes that oil shipments could begin flowing again through the strait and supply some meaningful relief.
But that price relief could have been short-lived.
“If there is no such thing as a deal, then we’re probably worse off each day that this continues in comparison with where we were per week and a half ago, when it appeared like a deal was on our doorstep,” says De Haan.
“So for motorists, they’re going to need to dig a little bit deeper again this week.”
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On May 29, U.S. President Donald Trump said in a social media post that a U.S. blockade on the Strait of Hormuz “will now be lifted,” contingent on Iran agreeing to terms of a peace deal.
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CAA says the national average for normal grade gasoline currently sits at about CAD$1.69 per litre as of publication. That’s down from $1.81 per week earlier, and $1.90 on May 6.
But on Monday, the U.S. said it had struck several targets in Tehran, and Iran responded by attacking targets within the region, where Kuwait reported incoming fire.
Iranian state television later shared footage of the ballistic missile launch, including a close-up showing a sticker on its body depicting a bruised U.S. President Donald Trump overlaid on a “closed” Strait of Hormuz with the caption: “Until the last American soldier leaves the region.”
Oil prices have been surging in response.
As of publication, U.S. crude oil, referred to as West Texas Intermediate (WTI), was hovering at over US$94 per barrel, and that’s up roughly nine per cent from as little as $86 on May 29.
“Oil prices had dropped precipitously the last couple of weeks based on U.S. President Trump saying that a deal may very well be close and imminent,” says De Haan.
“But then over the weekend Iran decided to walk away highlighting recent Israeli attacks on Lebanon and oil prices are going right back to where they were prior to all of the hopes and dreams over a U.S.-Iran deal.”
Higher prices for crude oil almost all the time end in costlier gasoline for consumers.
So how way more should Canadians expect to pay?
De Haan says Canadians should expect gas prices to rise between five and 15 cents per litre in the approaching days and weeks, depending on the actual region. He adds that diesel prices could also be slower to answer these recent developments.
In the long term, De Haan says frustration is mounting on consumers and global markets alike, not only with the geopolitical tensions, but in addition the uncertainty of when the conflict could ease — if in any respect.
“This may be very much the boy who cried wolf, the president who declared a deal and each single time of the 3 times this has now happened, we’ve seen nothing coming of it,” he says.
“That would come back to haunt the president especially within the months ahead, as many within the Republican party, his own party, are growing concerned with the prospects of the midterm elections and elevated gas prices that also could reach record levels this summer.”
–with a file from the Associated Press
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