The ceasefire between the U.S. and Iran has collapsed after just 18 days, leading to a significant increase in gas prices across the country.
According to energy expert Dan McTeague, the situation will result in higher gas prices by the end of the week, with the GTA expected to see prices reach $1.69 per litre.
Diesel prices are also expected to climb, with a staggering 13-cent increase, and gas prices are predicted to rise by five cents by Friday and two cents by Saturday.
McTeague warns that the market price of oil is at unsustainable low levels, with the "paper market" aggressively short-selling oil to conceal signs of a looming supply crisis.
He believes that the current low prices are a result of "jiggery-pokery" to keep prices down ahead of the November midterm elections, but that the levee will eventually break, leading to skyrocketing fuel prices.
Canada has already seen the impact of the ongoing conflict, with a report predicting that the average Canadian household will pay an extra $648 in fuel costs this year, not including premiums tacked on by shippers.
The U.S. strategic petroleum reserve is also not expected to provide relief, as it is only about 19 million barrels away from hitting its structural floor and will cease releasing oil into the market once reached.
McTeague warns that once this artificial ceiling collapses, oil prices will drastically correct upward, making the current situation a crunch point for global buffers and reserves.
The markets, he added, can't continue to trade down such a high-demand product in short supply, and the situation will only accelerate the inevitable.
