Canadian drivers had barely begun adjusting to another stretch of expensive fuel when the global oil market delivered a fresh warning. Brent crude jumped nearly 3% to around US$107.81 a barrel early Monday as new attacks on Saudi energy infrastructure and escalating threats around some of the world’s most important shipping routes revived fears of a deeper supply disruption.
The immediate crisis is thousands of kilometres from Canada, but the consequences can move quickly. Crude oil is the largest variable component behind gasoline prices, and Canadian fuel costs were already elevated before the latest surge. With Middle East supply routes under pressure, refining margins still high and uncertainty hanging over shipping, the next few days could determine whether motorists see another round of increases at the pump.
Oil Markets Are Pricing In Another Supply Shock
Brent crude climbed about 3% to US$107.81 a barrel during Monday trading, while U.S. West Texas Intermediate advanced roughly 2.9% to US$102.94. The latest gains came only days after another powerful rally pushed both major benchmarks above US$100. Brent had finished the previous week with a gain of more than 8%, illustrating how quickly traders have shifted from worrying about weak demand to worrying about whether enough oil can reliably reach world markets.
The change matters because oil traders are no longer reacting to a single isolated military incident. The market is attempting to price a widening network of risks involving Saudi infrastructure, tanker traffic, the Strait of Hormuz and the entrance to the Red Sea. When several transportation routes become vulnerable at the same time, even oil that is physically available can become harder and more expensive to deliver. That risk premium can show up in crude prices long before an actual shortage reaches a Canadian refinery or service station.
The Saudi Pipeline Attack Hit a Critical Escape Route
One of the most consequential developments was the drone attack on Saudi Arabia’s East-West pipeline. The system is strategically important because it allows Saudi crude to move from fields near the Persian Gulf to the Red Sea port of Yanbu without travelling through the Strait of Hormuz. Reuters reported that the pipeline normally handles roughly four million barrels a day and that its shutdown could threaten supply equal to about 4% of global oil consumption if the disruption persists.
That makes the incident more serious than an attack on an ordinary piece of infrastructure. The pipeline exists partly as a safety valve when shipping through Hormuz becomes difficult. With that alternative temporarily impaired, Saudi Arabia has less flexibility to reroute exports. Reuters reported that available inventories at Yanbu could sustain exports for only about five to seven days under current conditions. Repair estimates remained uncertain, creating exactly the kind of ambiguity that tends to add a geopolitical premium to oil futures.
Hormuz and Bab el-Mandeb Are Both Raising Alarm
The Strait of Hormuz has long been one of the most closely watched waterways in energy markets because roughly one-fifth of global crude oil and liquefied natural gas shipments historically transit the route. Weekend vessel movements remained well below recent norms, according to shipping data cited by Reuters, while a vessel was also reportedly struck by a projectile. Those developments reinforced concerns that commercial traffic could become increasingly difficult even without a formal, complete closure.
At the other end of the Arabian Peninsula, the Bab el-Mandeb strait is creating a second source of anxiety. Houthi advances around Yemen, including control of strategically located territory near the passage, have increased worries about Red Sea shipping. Tankers can sometimes reroute around southern Africa, but longer voyages consume more fuel, occupy vessels for additional days and increase freight costs. For oil buyers, therefore, the problem is not simply whether crude exists. It is increasingly about whether that crude can reach refiners safely, predictably and at an acceptable transportation cost.
Canadian Gasoline Was Already Expensive Before the Latest Jump
Canadian motorists were entering this new oil rally from an uncomfortable starting point. CAA’s latest national reading showed regular gasoline averaging about 179.5 cents per litre on September 13, compared with 174.9 cents a week earlier and 167.9 cents a month earlier. That means the national average had climbed almost 12 cents in roughly a month even before the latest Monday move in Brent was fully reflected through wholesale markets.
Regional prices were even more striking. Gas Wizard data for September 13 listed Toronto regular gasoline around 180.9 cents per litre, while Vancouver was roughly 214.9 cents. A 50-litre fill at those prices works out to about $90.45 in Toronto and $107.45 in Vancouver. For commuters filling up once a week, seemingly small moves in the per-litre price can therefore become meaningful household expenses. The renewed crude rally puts those already elevated numbers at risk of another upward adjustment rather than guaranteeing an immediate increase of any particular amount.
A US$107 Barrel Does Not Translate Directly Into One Pump Price
Crude oil is crucial, but gasoline pricing is not a simple conversion from dollars per barrel into cents per litre. The Bank of Canada identifies four broad influences on the pump price: crude oil, refining, retailing and taxes. Refining conditions are particularly important in 2026 because global disruptions have affected not only crude production and shipping but also the availability of finished fuels such as gasoline and diesel.
That distinction helps explain why pump prices can remain stubborn even after crude briefly falls. The Bank noted earlier this year that Canadian gasoline did not decline as much as crude following a previous Middle East price retreat because global gasoline supplies were constrained and refining margins remained elevated. Toronto motorists recently received an example of another factor at work when the annual switch from more expensive summer gasoline to winter-grade fuel was expected to produce a sizeable drop. Crude can push the general direction, but refinery margins, seasonal specifications and wholesale inventories influence how quickly that move reaches the station sign.
The Canadian Dollar Can Magnify the Increase
Canadian consumers face another variable because global crude and refined petroleum products are generally priced in U.S. dollars. A stronger Canadian dollar can absorb part of a rise in the international price of oil. A weaker loonie can do the opposite, effectively making every U.S.-dollar barrel more expensive when converted into Canadian currency.
That protection has recently been limited. Reuters reported on September 10 that the Canadian dollar was trading around C$1.3810 per U.S. dollar, or roughly 72.4 U.S. cents, even as crude moved above US$100. Ordinarily, Canada’s status as a major petroleum exporter can provide some support to the currency when oil rises. But trade uncertainty and broader financial-market pressures can weaken that relationship. For Canadian fuel buyers, an oil-price spike accompanied by a soft currency is an unpleasant combination: the underlying commodity costs more in U.S. dollars while each U.S. dollar also costs more Canadian currency to purchase.
Ottawa’s Tax Extension Provides an Important Cushion
There is at least one important buffer between the latest oil shock and the final price Canadians pay. Ottawa originally suspended the federal fuel excise tax from April 20 through September 7 in response to elevated energy prices. The normal federal rate is 10 cents per litre on gasoline and four cents per litre on diesel, so its scheduled return would have created an additional source of upward pressure just as crude prices were rising again.
The federal government instead announced that the full suspension would be extended through January 31, 2027, with draft legislation applying the continuation retroactively from September 8. Ottawa estimates the broader extended measure will provide about $5.3 billion in relief during 2026-27. That does not prevent market-driven gasoline increases; a jump in crude or wholesale gasoline can still reach consumers. It does mean, however, that Canadians are currently being shielded from a separate 10-cent federal gasoline-tax increase that otherwise would have landed at an especially difficult time.
The Pain Will Not Be Equal Across Canada
A global crude rally may be international, but its effect at Canadian pumps remains highly local. Provincial taxation, municipal fuel levies, refinery access, transportation costs and competition between stations all contribute to regional differences. Natural Resources Canada notes that gasoline prices can vary substantially between cities because the final retail price includes more than the underlying crude cost.
Vancouver is a clear example. The Vancouver area carries provincial and regional fuel charges that differ substantially from those faced by drivers in Ontario or Alberta, helping explain why prices there are routinely among Canada’s highest. Geography matters as well. Smaller and more remote markets can face higher transportation and distribution expenses, while refinery outages or regional supply constraints can create sharp temporary differences. As a result, a renewed oil rally does not mean every Canadian city will rise by the same number of cents. Some markets can absorb part of the move, while others may respond quickly through wholesale and retail pricing.
Higher Oil Prices Create Winners as Well as Losers in Canada
Canada’s position is unusual because the country is simultaneously a large oil exporter and a nation of consumers exposed to world fuel prices. The Canada Energy Regulator reported that Canada exported about 4.3 million barrels of crude oil per day in 2025, with approximately 90% going to the United States. The expanded Trans Mountain system has also increased access to Pacific markets, giving western Canadian producers more ability to sell overseas.
For oil-producing companies and governments collecting resource royalties, higher benchmark prices can therefore improve revenues, assuming production and price differentials remain favourable. That benefit does not cancel out the household impact. Motorists, trucking companies, farmers, airlines and businesses that depend heavily on transportation can face higher costs at the same time. The Bank of Canada has specifically noted that higher gasoline prices leave households with less money available for other purchases. Canada can benefit from selling expensive oil abroad while individual consumers still feel poorer every time they fill a tank.
Inflation Is Becoming Part of the Story Again
The renewed energy surge comes at an awkward moment for the Bank of Canada. Statistics Canada reported that the Consumer Price Index rose 3.0% year over year in July, with gasoline prices up 25.7% from a year earlier. Inflation excluding gasoline was substantially lower, demonstrating just how heavily fuel had been influencing the headline number. The August CPI reading is scheduled for release on September 14, meaning it will largely predate the newest oil-price shock.
The central bank was already watching the risk closely. At its September 2 decision, it kept the policy rate at 2.25% but said persistently expensive gasoline was keeping headline inflation around 3%. The Bank also warned that the longer high oil prices and elevated refinery margins persist, the greater the danger that businesses begin passing transportation and energy costs into other goods and services. One short-lived oil spike need not change interest-rate policy. A prolonged return to triple-digit crude could make the inflation outlook significantly more complicated.
The Next Few Days May Matter More Than the Initial Price Spike
What happens next depends less on one morning’s percentage move and more on whether the physical disruptions worsen. Traders will be watching how quickly Saudi Arabia can restore its East-West pipeline, whether vessel traffic through Hormuz improves, whether Houthi activity threatens more Red Sea shipping and whether diplomatic contacts can resume. A postponed Gulf-Iran meeting in Oman removed one potential source of near-term reassurance just as markets were searching for evidence that the conflict might be contained.
Inventory trends are another key piece. Reuters has reported substantial declines in global petroleum inventories during the broader conflict, leaving less of a buffer against fresh interruptions. If infrastructure repairs are quick and shipping routes stabilize, some of the geopolitical premium embedded in crude could unwind rapidly. If attacks spread or alternative export routes remain constrained, prices above US$100 could prove more durable. For Canadian motorists, that distinction is critical. A brief futures-market scare may have limited consequences; a sustained supply disruption eventually filters through refiners, wholesalers and service stations.
