Oil Prices Surge Past $98 on U.S.-Iran Conflict: What It Means for Your Wallet in Canada

Key impact: You will likely pay $10 to $20 more to fill your gas tank in the coming weeks. Home heating costs could also rise this winter.

Oil prices have climbed above $98 per barrel following escalating hostilities between the United States and Iran. The Strait of Hormuz—a critical chokepoint for global oil shipments—remains at risk of closure. This directly affects Canadians because higher crude oil prices mean more expensive gasoline, diesel, and home heating fuel.

What does this mean for you?

At the pump: If oil stays above $98, expect gasoline prices to rise by 5 to 10 cents per litre in the coming weeks. For a typical SUV with a 70-litre tank, that adds roughly $10 to $20 per fill-up.

Home heating: Homeowners using oil or propane for heating may see higher bills this winter.

Broader economy: The OECD has warned of a significant global economic slowdown due to higher energy costs. This could weaken consumer spending and business investment in Canada. The Bank of Canada may face pressure to keep interest rates higher to combat inflation from energy costs, which could affect mortgage rates and borrowing costs.

Canadian markets: Canada is a major oil producer and exporter. Global oil price spikes affect Canadian energy stocks and the loonie.

Who is affected

Drivers: Anyone who fills up a car, truck, or SUV will feel the impact immediately.
Homeowners using oil or propane: Your heating bills could rise this winter.
People on fixed incomes: Higher transportation and heating costs will strain budgets.
Variable-rate mortgage holders: Watch for potential rate hikes as inflation pressures mount.
Investors: Canadian energy stocks may rise, but broader market volatility is possible.

What you should do

Fill up now — Prices are likely to rise further in the coming days and weeks.
Budget for higher costs — If you are on a fixed income, plan for higher transportation and heating expenses in the coming months.
Check your mortgage — If you have a variable-rate mortgage, watch for potential rate hikes as the Bank of Canada may keep rates higher to fight inflation.
Stay informed — Diplomatic developments in the Middle East could quickly lower oil prices. Monitor news for any resolution.
Consider energy efficiency — If you heat with oil or propane, look into ways to reduce consumption this winter.

Bottom line

Oil prices above $98 per barrel mean higher costs for Canadian households. Expect to pay $10 to $20 more per fill-up at the pump and potentially higher heating bills this winter. The Bank of Canada may keep interest rates higher, affecting mortgages and borrowing costs. Fill up now, budget carefully, and watch for news that could lower prices.

Source: Morningstar / Dow Jones