Attacks in Iran spike oil prices, higher gasoline prices coming

By Zoe Mason
Southern Alberta Newspapers

Albertans are already feeling the impact of the U.S.-Israeli strikes on Iran in the price of oil and gas.

But high prices could also provide a buffer for a provincial budget projecting a massive deficit for the 2026-27 year.

Since strikes on Iran commenced Feb. 28, the price of oil has jumped significantly, with prices hovering around $90 USD per barrel at the time of publication, having reached a high of $120 over the weekend.

Prior to the strikes on Iran, WTI had been fluctuating between $60 and $65 per barrel. The provincial budget released Feb. 26 was based on a forecast WTI of $60.50.

Finance Minister Nate Horner said the current elevated prices will not impact the outlook on the budget, which maps a fiscal year starting in April, unless prices remain high for weeks to come.

Every dollar increase in the price of oil across the budget year would translate to an additional $680 million in revenue for the province.

“An extra month at elevated prices would probably have a dramatic impact,” he told reporters on March 3. “I don’t want to speculate on how much that will change things for this year, but we know it will help.”

As some estimates forecast crude oil benchmarks reaching $100 USD and higher, Horner cautioned that the higher prices rise in response to this crisis, the lower they may crash when the market stabilizes.

“The cure for high oil prices is high oil prices. It incentivizes production while deteriorating demand,” he said.

While Horner says the WTI trajectory is good for provincial coffers, he expressed sympathy for the human toll of the conflict.

“Nobody’s cheering on war. Nobody wants to see silly loss of life,” he said.

But he added that Canada’s stability has increased the attractiveness of the Canadian product.

“The premier’s phone has been hot with leaders in Europe and overseas even more interested in our products and getting them to market,” he said. “I think we can answer some of that question for the world.”

The long-term economic impact of elevated oil prices would include higher costs of living and an economic slowdown. Horner says his government will work through those scenarios for the next reporting period.

Meanwhile, short-term impacts will include higher prices at the pump.

In a blog post March 2, the gas price-tracker GasBuddy.com said prices in the U.S. and Canada will lcontinue to trend upward.