The ongoing conflict between Iran and the United States is predicted to sustain elevated oil prices throughout the rest of this year, impacting gasoline, diesel, and jet fuel costs. A recent report by Deloitte Canada indicates that North American oil prices are expected to average $85 US per barrel in 2026, a significant increase from the $67 average in 2025. Since the Middle East turmoil began in late February, oil prices have surged by more than 50%, with West Texas Intermediate (WTI) trading above $116 US per barrel on Tuesday.
However, there was a downward trend in benchmark prices on Wednesday due to news of a two-week ceasefire agreement between the U.S. and Iran. Andrew Botterill, an energy analyst at Deloitte Canada, noted that daily oil prices are highly volatile but anticipates a decline in the latter part of the year.
Over the past two years, oil prices have remained relatively low due to excess production compared to demand. The conflict in the Middle East, particularly the disruption in the Strait of Hormuz, has obstructed approximately 20% of the global oil and natural gas supply. Botterill highlighted the pressure on energy needs for the year.
Gasoline, diesel, and jet fuel prices are likely to stay elevated as oil trades above $100 US per barrel, impacting consumers. Prime Minister Mark Carney mentioned the government’s awareness of high gas prices and the consideration of measures to mitigate the impact.
Global natural gas prices have surged recently as countries seek sufficient supply for heating and power generation. However, Canadian natural gas prices have remained stable due to abundant supply and adequate storage. Botterill emphasized Canada’s reliance on exporting natural gas to the U.S., where ample supply also exists.
Projections from various sources, such as Calgary-based consultancy Sproule, align with Deloitte’s report, foreseeing WTI to average $84 per barrel in 2026. The energy landscape remains dynamic with ongoing geopolitical tensions influencing market trends.
