Quebec budget expects fuel price spike to be short-lived

Quebec is betting the spike in fuel prices will be short-lived, according to the economic forecasts in its 2026-2027 budget.

The Finance Ministry is working under the assumption that the conflict in Iran — which has driven up the price of oil — will last “about six weeks.”

“As a result, the upward pressure on oil prices should be concentrated largely in March and April,” the budget document released Wednesday says.

READ MORE: Quebec budget projects $8.6B deficit, focuses on core services

The ministry projects the average impact on a barrel of oil will amount to US$4, or a seven per cent increase, for all of 2026.

American and Israeli strikes on Iran occurred just days before the end of the fiscal year. Finance Minister Eric Girard acknowledges the forecast comes with uncertainty.

“No analyst can say the scope or duration of this conflict,” the minister told reporters. “We have to make economic assumptions.”

If the surge in oil prices were to continue for a prolonged period, the global economy would likely fall into recession, he noted. In that case, the pessimistic scenario outlined in the budget could materialize.

Quebec Liberal Party leader Charles Milliard said it is “a safe bet” the conflict will last longer, putting the ministry’s scenario in doubt.

Parti Québécois Treasury Board critic Pascal Paradis said the forecast “seems a little optimistic.”

Mouvement Desjardins chief economist Jimmy Jean was more forgiving, noting public servants must make forecasts with “limited visibility.”

Mouvement Desjardins expects the effect of the conflict on prices at the pump will likely last longer — about one quarter.

But the difference may not be significant for the government’s forecast, Jean said. Quebec’s economy is less dependent on fuel prices than it was during the oil shocks of the 1970s, and households have more leeway today.

The Finance Ministry expects Quebec’s economy to grow 1.1 per cent in 2026.

That assumption falls within a reasonable range, Jean said. Private-sector economists anticipate average real GDP growth of one per cent.

The renegotiation of the Canada–United States–Mexico Agreement remains “extremely important” for Quebec’s economy, the finance minister said.

The baseline budget scenario assumes tariffs will “remain relatively stable over the next few years.”

The situation could also improve if talks between Canada and the United States end favourably, Girard said. “It’s possible conditions will be better. If there’s a surprise, it could be a positive one.”

This report by The Canadian Press was first published in French on March 18, 2026.