Strait of Hormuz Crisis Pushes Canadian Gas Prices Higher as Iran War Drags On

Canadian motorists are paying noticeably more at the pump again this month as the United States-Iran conflict and the disruption of shipping through the Strait of Hormuz continue to ripple through global energy markets. Average gasoline prices across the country sat at roughly $1.68 per litre this week, with several provinces seeing prices climb back toward the $1.80 to $2.00 range that defined the worst weeks of March. Brent crude has traded above 100 US dollars a barrel for most of April.

The price pressure is the most direct way that Canadians are feeling the global crisis triggered by joint US-Israel strikes against Iran in late February and the continuing standoff in the world's most important oil chokepoint. Roughly one-fifth of global oil supply normally moves through the Strait of Hormuz, and the corridor has been effectively closed for nearly two months as Iran has used ship seizures and threats to control which vessels pass.

What is happening in the Strait

Shipping traffic through the Strait of Hormuz has been heavily disrupted since 28 February 2026, when the United States and Israel launched their air campaign against Iran. The strikes killed several senior Iranian officials and triggered Iranian retaliation that has included direct missile and drone attacks on US and Israeli targets in the region.

The result has been a near-total disruption of normal shipping through the Strait. Reports earlier in April indicated that Iran was continuing to seize ships and to assert the right to decide which vessels could pass, while the United States imposed a blockade on Iranian ports and vessels. Daily ship movements through the Strait have remained well below their pre-war levels of more than 100 vessels per day.

President Donald Trump's unilateral extension of the ceasefire has not opened the Strait. The US-Iran maritime standoff has continued to evolve, with US envoys including Steve Witkoff and Jared Kushner travelling to Pakistan for direct talks with Iranian counterparts. Those talks have produced no concrete agreement on shipping access.

The price impact

The result for global oil markets has been pronounced. Brent crude prices surged by 50 per cent or more from their pre-war levels, hitting nearly 120 US dollars a barrel at their peak in March before settling into a band between 100 and 110 US dollars in April. West Texas Intermediate has tracked similarly, hovering between 95 and 100 US dollars per barrel.

For Canadian consumers, the most visible consequence has been at the pump. Gasoline prices surged 21.2 per cent on a monthly basis in March, the largest single-month increase ever recorded by Statistics Canada for that category. April prices have not spiked at the same rate, but they remain elevated compared to where they were before the war began.

The CAA's national gas-price tracker has shown daily averages in the 165 to 170 cent range across most of the month, with regional variation driven by provincial taxes and refinery proximity. Drivers in Vancouver and Montreal have continued to see some of the highest prices in the country, while Alberta and Saskatchewan have benefited from their proximity to Canadian refineries.

Inflation pressure

The energy spike has reversed several months of progress on inflation in Canada. Headline inflation jumped to 2.4 per cent year-over-year in March, up from 1.8 per cent the previous month, with energy alone contributing roughly 0.7 percentage points to the annual rate. Statistics Canada's analysis attributed the bulk of the increase to gasoline.

The Bank of Canada will weigh the energy-driven inflation surge against the broader weakening of the economy when it announces its next interest rate decision on April 29. Markets expect a hold at 2.25 per cent, but Governor Tiff Macklem's communication will be parsed carefully for any signal that the central bank is concerned about the second-round effects of the energy shock.

Beyond gasoline, higher oil prices feed into a wide range of other consumer costs. Diesel prices affect freight and food distribution, jet fuel costs influence airline ticket pricing and home heating fuel costs hit households in regions still dependent on oil heat. Each of those channels has begun to show up in price data, with more expected through the spring.

The Canadian energy producer side

The picture for Canadian oil producers is more nuanced. Higher global prices benefit western Canadian producers, particularly those with access to export pipelines and rail capacity. The producer revenue side has been a strong source of fiscal support for Alberta and Saskatchewan, both of which collect significant resource royalties.

However, Canadian heavy oil pricing has not fully captured the global price increase. The differential between Western Canadian Select and benchmark crudes has widened in places, reflecting capacity constraints and the trade dynamics around Trump-administration tariffs. Canadian producers have been calling on Ottawa to accelerate the long-discussed expansion of pipeline capacity to enable better access to international markets.

The discussion has fed into the ongoing negotiations between Premier Danielle Smith's Alberta government and Prime Minister Mark Carney's federal team over a memorandum of understanding that could enable a new bitumen export pipeline. The energy crisis has added urgency to those talks, even as several deadlines have slipped this month.

The Canadian household angle

For Canadian households, the energy shock has come at a particularly difficult moment. The labour market is softening under the weight of US tariffs, the housing market remains in a multi-year correction and rising mortgage renewals are increasing monthly payments for many homeowners. Adding higher gasoline costs to that mix has put real pressure on household budgets.

Carney's federal government has tried to respond. The temporary suspension of the federal fuel excise tax, announced earlier in April and running through September 7, has shaved several cents per litre off the pump price. The Prime Minister has framed the suspension as targeted relief for households, even as critics note that it does little to address the underlying supply shock.

Provincial governments have varied in their responses. Some have signalled openness to additional tax relief, while others have argued that price-shock interventions are not the right tool for what is fundamentally a global supply problem. The political conversation will likely intensify if prices remain elevated through the summer driving season.

The diplomatic context

The Canadian government has limited direct leverage over the conflict, but has been working through multilateral channels. Foreign Affairs Minister officials have engaged with G7 partners, the European Union and the Gulf states on de-escalation efforts and on contingency planning for further supply disruptions.

Canada has continued to support Israel's right to self-defence while expressing concern about civilian casualties in Iran and across the region. The federal government has also pushed for the protection of Canadian citizens in the affected countries, with consular services scaling up for Canadian nationals seeking to leave the region.

The Strait of Hormuz crisis is also a reminder of the structural vulnerability that comes with global dependence on a small number of energy chokepoints. The Suez Canal, the Strait of Malacca and the Strait of Hormuz remain the three most consequential oil shipping corridors, and disruptions in any of them have outsized effects on global prices.

What it means for Canadians

The most direct impact for Canadian households is the higher cost of fuel and, by extension, of many goods that depend on transportation. The political economy of the response is also significant: the war and the price shock have given Carney and his government a politically charged backdrop for the budget and trade conversations of the next several months.

For Canadian foreign policy, the conflict has been a reminder of how exposed Canadian consumers and producers are to events in regions far from the country. The government's tariff-response strategy and the broader Defence Industrial Strategy both reflect the recognition that Canada cannot depend on a stable global trading and security environment to do its economic planning for it.

What's next

The path forward depends on diplomacy. The Witkoff-Kushner mission to Pakistan is the most concrete US-Iran dialogue track currently active, and any breakthrough on shipping in the Strait of Hormuz would have an almost immediate impact on global oil prices and, with a short lag, on Canadian gasoline prices.

In the absence of a breakthrough, Canadian motorists should expect continued elevated prices through at least the early summer. The Canadian Real Estate Association has already cited the energy shock as a factor in its decision to downgrade its housing market forecast, and other industry associations are likely to follow suit if the disruption continues.

The next several weeks will be particularly important for the trajectory of the crisis. With the ceasefire extension in place and direct US-Iran contacts ongoing, the potential for de-escalation exists, but the long arc of the conflict has been one of repeated near-misses on diplomacy. Canadian households, businesses and policymakers will be watching closely.