With the upcoming construction holiday, it’s no surprise that over a third of Quebecers are gearing up for travel. However, the joy of vacation may be dampened by soaring gas prices. In Montreal, one Esso station on Atwater Avenue recorded a price of 191.1 cents per litre on Friday, marking a significant increase of over 10 cents in just a week, as reported by GasBuddy. This spike has pushed gas prices above the 190-cent threshold, a level not seen since May. Experts are cautioning that prices could surge by an additional 20 cents per litre by early August.
The surge in gas prices is happening against a backdrop of escalating tensions between the U.S. and Iran. The recent hostilities between the two nations, particularly concerning commercial ship passages through the Strait of Hormuz, have led to increased uncertainties in the oil market. The U.S. has reimposed sanctions on Iranian oil and restricted ship movements, contributing to a sharp rise in Brent crude prices, which reached US$81 per barrel on Monday and closed the week at US$83.27.
This price hike marks a reversal from the previous trend of decreasing gas prices during a brief ceasefire period between the U.S. and Iran. The inflation rate, which had reached a recent high of 3.2 per cent in May, is expected to drop below three per cent due to the decline in gas prices in June.
Economists are closely monitoring the situation, with expectations that inflation will moderate in the coming months. The Bank of Canada held its benchmark interest rate steady at 2.25 per cent, emphasizing the ongoing uncertainty stemming from the Middle East conflict and its potential impact on inflation. The central bank predicts that energy price shocks will continue to influence inflation until early 2027, but it remains watchful for any signs of broader inflationary pressures in the economy.
