Experts warn Middle East conflict may hike Canadian grocery and fuel prices as global oil costs surge, affecting supply chains nationwide.
Global Conflict Sends Oil Prices Soaring
OTTAWA — The escalating conflict in the Middle East is sending ripples across Canada, with analysts warning that supply chains and grocery bills could soon feel the strain. Recent attacks involving Israel and the U.S. against Iran have pushed global oil prices sharply higher, raising concerns about potential disruptions in key shipping routes like the Strait of Hormuz, a critical artery for global energy transport.
Fraser Johnson, a professor at Western University’s Ivey Business School, explained, “About 20 per cent of the world’s oil flows through the Strait of Hormuz. Any disruption there naturally affects global oil prices. It’s a basic supply-and-demand situation.”
While Canada does not import oil or natural gas from the Gulf, global commodity pricing means that a squeeze anywhere in the world can impact prices here at home.
Gasoline and Jet Fuel: The First Signs of Strain
TD Bank economist Marc Ercolao highlighted that the national average gas price rose 12 cents this week — nearly a 10 per cent jump — and warned that further increases are likely. At National Bank, analyst Cameron Doerksen noted that jet fuel costs were already trending upward before this week’s spike, potentially impacting Canadians planning summer getaways.
“Fuel prices fluctuate often,” Doerksen said, “but for now, airlines may face higher costs, which could trickle down to travelers this summer.”
How Rising Energy Costs Hit Your Wallet
Higher oil prices aren’t just about what you pay at the pump. Johnson noted that increased energy costs raise freight rates, which are eventually passed down to consumers. Many businesses include fuel surcharge clauses in supplier contracts, meaning it can take weeks—or even months—before the effects show up in stores.
“This means the first place Canadians will notice the pinch is likely at the grocery store,” Johnson explained. “Fresh food with shorter shelf lives is especially sensitive to shipping disruptions.”
Food Prices Already Under Pressure
Food inflation has been a sore point in Canada since pandemic-related supply chain hiccups sent grocery bills climbing. Statistics Canada reported a 7.2 per cent year-over-year increase in food prices in January. Staples like beef and coffee are seeing double-digit hikes, influenced by environmental challenges and higher import costs from U.S. trade tensions.
Desjardins economists noted that energy market volatility could nudge overall inflation up by one or two percentage points this year. A stronger Canadian dollar, fueled by higher oil revenues, could partially offset these increases.
Businesses Brace for the Ripple Effect
Companies are keeping a close eye on the evolving energy landscape. Spin Master CFO Jonathan Roiter reassured investors that the spike in oil prices has yet to significantly affect the company’s supply chain. Still, he cautioned that if high energy costs persist, freight charges could rise in three to four months.
As global tensions continue to reshape markets, Canadians may see the impact first at the gas pump and grocery aisles, reminding everyone that even distant conflicts can have very local consequences.
