Saskatchewan drivers brace for higher gas prices amid conflict in Iran

Prices at the pumps across the province are expected to rise sharply in the coming days. CTV's Stacey Hein has more on how the conflict is affecting prices.

Saskatchewan drivers can likely expect higher prices at the pumps as weekend U.S. and Israeli strikes on Iran and subsequent Iranian retaliation disrupt global oil markets and push crude costs higher.

Oil prices jumped Monday, with the April crude oil contract rising US$4.21 to US$71.23 per barrel. The increase followed a major escalation in the Persian Gulf, including a drone attack targeting Saudi Arabia’s Ras Tanura oil refinery, one of the largest in the world.

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Even though Saskatchewan has its own oil refineries, Devan Mescall, an economics professor at the University of Saskatchewan, said local gas prices are still closely tied to the international price of crude.

“All the oil is benchmarked through benchmark pricing, through the Brent Crude, and so anything that impacts oil supply broadly does impact the prices that are paid,” Mescall said in an interview with CTV News.

Another factor driving higher prices is oil transport. The Strait of Hormuz, a key shipping route for about a fifth of the world’s oil, is facing major disruptions.

Mescall noted that insurance companies are starting to refuse coverage for ships in that region.

“All of a sudden we will see a larger slowdown in the amount of oil that’s moved out of that region, and that will continue to have an impact on our gas prices all the way here in Saskatoon,” he said.

Gas price analyst Dan McTeague expects oil prices to continue climbing, which would further affect prices at the pumps.

“Ultimately, I think we’re headed towards an increase of $20 a barrel which would translate $0.20 a litre increase and for diesel as much as $0.35-$0.40 a litre,” McTeague told CTV News.

Drivers in Saskatoon said they are feeling the pinch at the pumps, and the prospect of higher prices is not sitting well.

“I drive every day, so yeah, it’s getting really expensive,” said Ashton Johnson.

“It seems like every time you go down the street, the prices go up every day,” said John Beckett.

Mescall noted the key concern for consumers is how high prices will go and how long they’ll stick around.

-With files from The Canadian Press and Jonathan MacInnis