The ongoing conflict between Iran and the U.S. is expected to keep oil prices elevated for the rest of the year, impacting gasoline, diesel, and jet fuel costs as well. A recent report by Deloitte Canada projects that North American oil prices will average around $85 US per barrel in 2026, a significant increase from the $67 average in 2025.
Since the Middle East turmoil started in late February, oil prices have surged by more than 50%, with West Texas Intermediate (WTI) trading above $116 US per barrel as of Tuesday morning. However, prices started to trend downwards on Wednesday following news of a two-week ceasefire agreement between the U.S. and Iran.
Andrew Botterill, an energy analyst at Deloitte Canada, noted the high volatility of day-to-day oil prices but anticipates a decline in the latter part of the year. The conflict in the Middle East has disrupted transit through the Strait of Hormuz, leading to a 20% reduction in the global oil and natural gas supply available to international buyers.
The continued strain on energy resources is expected to persist throughout the year, creating pressure on fuel prices. Prime Minister Mark Carney acknowledged the impact of high gas prices and mentioned that the government is exploring ways to alleviate the burden on consumers.
The report by Deloitte aligns with forecasts from other organizations like Calgary-based consultancy Sproule, which predicts WTI to average $84 per barrel in 2026. Global natural gas prices have spiked in recent weeks due to supply shortages in various countries, but Canadian prices have remained stable thanks to ample supply and storage capacity.
Botterill emphasized Canada’s reliance on exporting natural gas to the U.S., where there is also a surplus, contributing to the consistent pricing in the Canadian market.