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FORT McMURRAY – Wood Buffalo residents may have noticed gasoline prices creeping higher, sometimes through sudden swings of as much as 20 cents per litre, as global oil and refining disruptions tighten fuel supplies.
Patrick De Haan, head of petroleum analysis at GasBuddy, says the latest increase is no longer being driven solely by renewed conflict involving Iran.
He says global refining capacity is under growing pressure as the Strait of Hormuz remains effectively closed and Ukrainian attacks continue to disrupt Russian refineries.
The Strait of Hormuz is one of the world’s most important oil shipping routes. Recent attacks on commercial vessels, followed by U.S. strikes on Iranian military assets, have sharply reduced tanker traffic through the region.
Iran’s Revolutionary Guard has pledged to prevent oil from passing through the waterway while the disruption continues.
De Haan says the reduced flow of crude oil and refined fuels is placing additional strain on an already tight global supply system.
Oil prices rose sharply during the previous week as markets reacted to the renewed escalation. West Texas Intermediate crude climbed by roughly US$8 per barrel over seven days, while Brent crude gained about US$9.
Further disruptions are adding pressure outside the Persian Gulf.
Drone attacks have halted loadings at Russia’s Caspian Pipeline Consortium terminal, while threats involving Saudi shipping routes through the Red Sea have raised additional concerns about the movement of energy supplies.
De Haan says price-cycling markets could experience further abrupt increases. Price cycling occurs when retailers sharply raise pump prices before gradually lowering them over several days, creating noticeable swings between stations and communities.
Fuel inventories also remain tight. Gasoline supplies were reported below their five-year seasonal average, while distillate inventories, including diesel and heating fuel, were also well below typical levels.
Refineries were operating at more than 96 per cent of capacity, leaving little room to increase production if further disruptions occur.
De Haan says the combination of restricted shipping, refinery outages and limited spare refining capacity is creating a more difficult period for motorists, even when crude oil prices are not rising at the same pace.
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