As tensions in the Middle East persist, experts caution that Canadians are unlikely to experience significant relief in food, fuel, or oil prices anytime soon. The situation is compounded by stalled plans to reopen the crucial Strait of Hormuz, which is vital for global energy and fertiliser supplies. Recent data indicates marked increases in consumer costs, particularly for gasoline, with prices surging by 47 cents compared to a month earlier.
Ongoing Volatility in Oil Prices
The war in Iran has introduced considerable uncertainty into the market, prompting Deloitte to revise its forecasts for Canada’s GDP growth downward. Andrew Botterill, the company’s global financial advisory leader for energy, noted that the next four to eight weeks are likely to see continued volatility. “A lot of the supply chain isn’t up and running and fully integrated like it was before the conflict,” Botterill remarked.
He explained that while discussions about reopening the Strait of Hormuz are ongoing, the path to stabilisation will be slow. “It takes a long time for these things to settle out,” he added, emphasising the long-term disruptions that have yet to be resolved.
The Impact on Food Prices
The Strait of Hormuz plays a critical role in the global supply of fertilisers, controlling a third of the world’s trade in essential nutrients such as urea and nitrogen. Sylvain Charlebois, director of the Agrifood Analytics Lab at Dalhousie University, expressed concerns that rising energy prices may hinder expectations for a decrease in food inflation. “We were anticipating a drop in food inflation rates this spring, but ongoing attacks in Iran could keep energy costs elevated,” he said.
Charlebois warned that if farmers lack access to necessary fertilisers, crop yields and productivity could suffer. “Low inventories or anticipated shortages during the fall harvest could prompt price hikes,” he added, indicating a potential ripple effect on the food supply chain.
Freight Costs to Hit Consumers
Mike von Massow, a food economist at the University of Guelph, highlighted that despite Iran not being a major food exporter, Canadians will still feel the financial impact through increased freight costs. “Products that have a high proportion of their retail price tied to freight will inevitably become more expensive,” he stated.
He pointed to fresh produce, particularly items that must be imported during this season, such as broccoli and strawberries, as the most affected. “We expected a two to three percentage point increase in these prices, and consumers should see that reflected quickly,” von Massow noted.
Gas Prices Remain Uncertain
While oil prices saw a notable drop following the ceasefire announcement, the impact on Canadian gas prices remains unclear. Benchmark U.S. crude oil fell by US$16.47 to US$96.48 per barrel, and Brent crude decreased by US$13.79 to US$95.48 per barrel. Despite this, the national average for unleaded gasoline in Canada was reported at $1.82.4 per litre—a two-cent increase from the previous day.
Shipping companies are grappling with a backlog of vessels in the Strait of Hormuz, leaving the longevity of the ceasefire uncertain. Von Massow explained, “We’re experiencing fuel price pressures because we rely on imported oil from the Middle East, which is directly affected by the situation in the Strait of Hormuz.”
Why it Matters
The ongoing geopolitical tensions in the Middle East have immediate and tangible effects on Canadian consumers. With rising fuel and food prices, households are likely to feel the pinch as inflationary pressures mount. The slow recovery of supply chains and the unpredictability of international relations will continue to challenge affordability in the months ahead, placing additional strain on everyday Canadians. As such, the interplay between global events and local economies is more crucial than ever, highlighting the interconnected nature of modern markets.