The ongoing conflict between Iran and the United States is forecasted to maintain elevated oil prices for the rest of the year, impacting gasoline, diesel, and jet fuel costs. A recent report by Deloitte Canada projects that North American oil prices will average $85 US per barrel in 2026, a notable increase from the $67 average in 2025. Since the Middle East turmoil began 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.
Despite the sharp increase, benchmark prices showed a downward trend on Wednesday following news of a two-week ceasefire agreement between the U.S. and Iran. Andrew Botterill, an energy analyst at Deloitte Canada, highlighted the high volatility of daily oil prices but anticipates a decline in the latter half of the year.
For the past two years, oil prices have remained relatively low due to surplus production compared to demand. The ongoing conflict in the Middle East, particularly affecting transit through the Strait of Hormuz, has disrupted approximately 20% of the global oil and natural gas supply to international markets. Botterill emphasized the significant pressure on energy needs for the current year.
Gasoline, diesel, and jet fuel prices are likely to stay elevated in the near term as oil continues to trade above $100 US per barrel. Prime Minister Mark Carney acknowledged the issue of high gas prices and stated that the federal government is exploring ways to mitigate the impact on consumers.
Regarding natural gas, global prices have surged in recent weeks, driven by heightened demand for heating and power generation. However, Canadian natural gas prices have not seen a significant increase due to sufficient supply and storage levels. Botterill noted the reliance on exporting natural gas to the U.S., where ample supply also exists.
The latest Deloitte report aligns with forecasts from other firms, such as Sproule, which predicts WTI to average $84 per barrel in 2026. While global natural gas prices have risen, Canada’s market remains stable due to abundant supply and storage capacities.
