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TORONTO — Coordinated U.S. and Israeli attacks on Iranian targets are raising new questions about how quickly oil and gasoline prices could climb in Canada, with analysts at GasBuddy.com warning motorists may see gradual increases at the pump if tensions continue to escalate.
Oil markets are expected to react as trading resumes, with early estimates suggesting crude could rise between five and 10 per cent amid fears about potential supply disruptions in the Middle East. Analysts at GasBuddy say the key concern is not only Iran’s oil production but the possibility of instability in the Strait of Hormuz, a narrow shipping corridor that handles roughly one-fifth of global oil flows.
Even without a full shutdown, uncertainty alone can push prices higher as traders add a geopolitical risk premium. Reports of some shipping rerouting in the region have already added to market anxiety, though oil flows have not fully stopped.
GasBuddy analysts say the current situation differs from the sharp price shock seen after Russia’s invasion of Ukraine in 2022. Iran exports far less oil than Russia, and global supply-and-demand conditions are not viewed as being as strained as they were during the post-pandemic recovery, when refinery capacity was tight and demand surged.
In Canada, motorists are expected to feel upward pressure on gasoline prices, though analysts at GasBuddy say increases would likely be measured in cents per litre rather than sudden large jumps, at least in the short term.
One factor Canadian drivers face more directly than Americans is the exchange rate. Oil is priced globally in U.S. dollars, meaning a stronger U.S. currency can make fuel more expensive in Canadian dollars even if crude prices move by the same percentage. If the Canadian dollar weakens, retail fuel prices north of the border could rise somewhat faster than in the United States.
GasBuddy analysts say the biggest risks for sharper increases would include sustained disruptions in the Strait of Hormuz, damage to Iranian export infrastructure, regional escalation of the conflict or a significant spike in shipping and insurance costs.
For now, the outlook points to gradual increases rather than dramatic overnight surges, with oil expected to move first and retail gasoline prices adjusting more slowly in the days that follow.
Analysts at GasBuddy caution that the situation remains fluid, and forecasts could change quickly depending on how events unfold in the region.
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