Now might be a good time to fill up the tank because there’s a good chance gas prices are headed even higher this week.
What happened: The nationwide average price of gas at the pump passed $1.50 per litre, around 15% higher than a week ago, as the war in the Middle East pushes up the price of crude — and prices are likely to rise more this week.
Both Brent and WTI crude — the two major benchmarks of oil prices — are trading close to US$120 per barrel, their highest level since 2022.
Why it’s happening: While Iran itself isn’t a major producer of oil (accounting for roughly 5% of the world’s supply), it has effectively closed the Strait of Hormuz, a narrow shipping channel through which around 20% of the world’s oil supply passes.
That’s forced other Middle Eastern countries to cut their production, as they run out of places to store oil that can’t be shipped to customers.
Why it matters: Beyond just making it more expensive to fill up at the pumps, higher oil and gas prices act as a drag on economic growth and drive up prices by making it more expensive to produce pretty much everything. In other words, bad news all around.
What’s next: Goldman Sachs warned the price of oil could rise to US$150 per barrel by the end of the month unless the war is de-escalated to allow oil production and shipping to get back to normal.