Canadians are feeling the pinch at the pump, with gas prices rising an average of 5.2 cents per litre over the past week, according to recent data from Kalibrate.
This latest increase isn’t just a domestic issue—it’s closely tied to rising global oil prices and growing geopolitical tension. Crude oil prices surged this week, buoyed by hopes for improved U.S.-European trade relations and escalating pressure from U.S. President Donald Trump on countries still purchasing Russian oil.
Tariffs, tariffs and more tariffs
Trump has threatened to impose tariffs of up to 100% on nations that continue to buy crude from Russia—unless Moscow agrees to a peace deal with Ukraine. This move targets major Russian oil buyers like India, China, and Turkey, with India being the biggest since 2022, importing as much as 2 million barrels per day—roughly 2% of the global oil supply.
The U.S. oil benchmark, West Texas Intermediate, jumped by 3.7% this week, while the international Brent crude benchmark climbed 3.4%, both helping drive up pump prices around the world, including here in Canada.
RBC Capital Markets analyst Brian Leisen noted that while Trump has previously backed off similar threats to avoid disrupting oil markets, he may be willing to tolerate moderately higher prices this time in pursuit of his stated goal: ending the war in Ukraine.
The price paradox
Back home, gas prices rose in every province outside the Maritimes. Thunder Bay, Ontario recorded the largest spike from July 24 to July 31, with prices increasing by 9.7 cents per litre. Kelowna, B.C. and Prince Albert, Saskatchewan weren’t far behind, both seeing jumps of 9.2 cents per litre.
Interestingly, despite this week’s hike, average fuel prices remain significantly lower than this time last year. In August 2024, Canadians were paying about $1.69 per litre, compared to roughly $1.42 today.
The pressure’s on
Still, there’s reason for concern. Analysts at JP Morgan warn that if Trump follows through on his threats, Russia may retaliate by halting the CPC pipeline from Kazakhstan—a route critical to U.S. oil giants like Chevron and ExxonMobil. The bank noted, “Russia is not without leverage.”
In fact, tensions may already be having an impact. Reuters reports that Indian state-owned refineries have temporarily stopped buying Russian crude in response to Trump’s threats, potentially signaling a broader shake-up in global energy flows.
With international politics and energy policy more intertwined than ever, Canadian gas prices are becoming a barometer not just of supply and demand, but of global diplomacy in action.
