Gas prices in Canada are expected to start rising again as any progress made toward a peace deal between the United States and Iran appears to be unraveling.
Consumers should expect to “dig a little deeper” in their wallets, according to a gas price expert.
“The rude slap in the face at the beginning of the business week is that a trade deal is now off the table, and we’re kind of back at it,” says oil analyst Patrick de Haan at GasBuddy. “Ground zero is starting over, and the U.S. is no closer to a peace deal than it was a week and a half ago.”
Global oil markets have been rising since shipping traffic effectively stopped in the Strait of Hormuz when the conflict began at the end of February.
Consumer gasoline prices have seen some relief over the past few weeks as a peace deal was reportedly being negotiated, raising hopes that oil shipments could start flowing again through the strait and providing some useful relief.
But this price relief may have been short-lived.
“If a deal is not reached, we will likely be in a worse position every day that this continues than we were a week and a half ago, when it looked like a deal was on our doorstep,” says de Haan.
“So for motorists, they’re going to have to dig a little deeper again this week.”
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On May 29, US President Donald Trump said in a social media post that the US blockade of the Strait of Hormuz “will now be lifted,” provided Iran agrees to the terms of the peace deal.
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The CAA says the national average for regular gasoline is currently about C$1.69 per liter as of publication date. This is down from $1.81 the week before, and $1.90 on May 6.
But the United States said on Monday it had struck several targets in Tehran, and Iran responded by attacking targets in the area, where Kuwait reported gunfire.
Later, Iranian state television shared footage of the ballistic missile launch, including a close-up showing a sticker on his body depicting US President Donald Trump bruised and covered by the “closed” Strait of Hormuz with the caption: “Until the last American soldier leaves the area.”
Oil prices rose in response.
As of press time, the price of US crude oil, known as West Texas Intermediate (WTI), was hovering at more than US$94 per barrel, about nine percent higher than its low of $86 on May 29.
“Oil prices have fallen sharply over the past two weeks after US President Trump said a deal could be close,” says De Haan.
“But then over the weekend Iran decided to withdraw and highlight the new Israeli attacks on Lebanon and the return of oil prices to what they were before all the hopes and dreams about a US-Iranian deal.”
Higher crude oil prices always make gasoline more expensive for consumers.
So, how much extra should Canadians expect to pay?
De Haan says Canadians should expect gas prices to rise between 5 and 15 cents per liter in the coming days and weeks, depending on the particular region. He adds that diesel prices may be slower to respond to these latest developments.
In the longer term, de Haan says frustration is mounting among consumers and global markets alike, not only because of geopolitical tensions, but also because of uncertainty about when the conflict might subside — if it happens at all.
“This is pretty much the boy who cried wolf, the president who announced a deal, and each of the three times this has happened, we haven’t seen anything come of it,” he says.
“This may come back to haunt the president, especially in the coming months, as many in the Republican Party, his party, grow increasingly concerned about the potential for midterm elections and rising gas prices that could still reach record levels this summer.”
—With file from The Associated Press
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