Gas prices in Canada saw a slight increase overnight due to the North American oil market responding to heightened tensions in the Middle East. The U.S. and Israel carried out a joint attack on Iran over the weekend, raising concerns about the potential disruption of oil tankers accessing the crucial Strait of Hormuz. Experts suggest that as long as the conflict persists and disrupts the shipping route, gas prices could remain elevated.
Rory Johnston, an oil markets researcher based in Toronto, emphasized the significance of the duration of the potential closure of the Strait of Hormuz. He stated that if the closure lasts for weeks or months, it would have a more severe impact on the market compared to a shorter closure period.
The Canadian oil industry typically benefits from higher prices during geopolitical uncertainties due to the country’s perceived stability. By midday on Monday, the price of Brent crude oil, the global benchmark, reached $75.79 US after hitting $78.04 US overnight. West Texas Intermediate crude oil, the U.S. standard, remained at $70.60 US.
Retail pump prices in Canada rose to 135.3 cents per litre by Monday morning. While there hasn’t been an immediate supply disruption, the U.S.-Iran conflict could lead to increased volatility and premiums due to geopolitical risks. Any threats to oil production in Iran or continued shipping disruptions could further drive up gas prices.
The ongoing tensions in the Middle East, particularly around the critical Strait of Hormuz, have led to increased concerns in the oil market. The strait is a crucial chokepoint through which a significant portion of the world’s crude oil passes. Disruptions in this area could significantly impact global crude oil supply.
Recent incidents involving oil tankers in the region have raised alarms, with vessels being targeted by projectiles and drones. Preventative measures have been taken, leading to a considerable reduction in the flow of crude oil through the strait. If the conflict escalates further, the impact on oil supply could persist, keeping prices elevated.
Experts suggest that unless the conflict is resolved swiftly, the oil market is likely to face continued uncertainty and potential price increases in the coming days.
