Gas prices in Canada saw a slight increase overnight, influenced by tensions in the Middle East due to a joint U.S. and Israeli attack on Iran. The ongoing conflict has the potential to disrupt oil tankers accessing the vital Strait of Hormuz, impacting gas prices for the duration of the crisis, experts suggest.
The duration of the Strait’s closure is crucial, with short closures having minimal impact, while prolonged closures significantly affect the market. Canadian oil markets may benefit from higher prices, given Canada’s perceived stability amidst geopolitical uncertainties.
As of midday on Monday, Brent crude prices rose to $78.04 US before settling at $75.79 US, while West Texas Intermediate crude stood at $70.60 US. Retail gas prices in Canada increased to 135.3 cents per liter, reflecting potential volatility from the U.S.-Iran conflict.
Gasoline prices could face upward pressure if Iranian oil production is threatened or shipping disruptions persist. The Strait of Hormuz, through which a significant portion of global crude oil passes, plays a critical role in oil price dynamics. Disruptions in the strait have led to preventive measures by commercial vessels, impacting global oil supply.
The conflict escalation in the Middle East has the potential to sustain higher oil prices unless tensions de-escalate. The impact of the conflict on global oil supply underscores the significance of the region in determining oil market dynamics.