Essence: Yvan Cliche Warns Quebec Gasoline Could Climb Higher
Essence is already showing up at the pump in Quebec. Yvan Cliche says gasoline has risen sharply, but he warns it could climb much further if the conflict in the Persian Gulf is not resolved quickly.
Gasoline in Quebec was around 2 dollars a litre, while oil was trading at about 100 US dollars per barrel. Prices were about 50% higher than before the war against Iran began at the end of February.
Hormuz and the price floor
The Strait of Hormuz normally carries 20% of world oil traffic, and about 10 to 12 million barrels of oil per day have not been transiting through the region for more than two months. That interruption has kept pressure on fuel prices even after some countries used strategic reserves to absorb part of the shock.
Several observers had expected oil to reach 150 to 200 dollars per barrel. The market did not get there, in part because the oil market had been considered in surplus before the conflict began, and because the International Energy Agency coordinated the injection of about 400 million barrels into the market. That volume covered more than one month of the supply deficit created by the loss of exports from the Persian Gulf.
Asia cuts demand
Asian countries also responded with rationing measures, including more telework, fewer school days, gasoline and diesel rationing, restrictions on car traffic, and lower air-conditioning use in commercial buildings. Those steps reduced world demand by about 4 million barrels per day, blunting the upside in crude prices for now.
Yvan Cliche put the risk bluntly: "Le prix de l’essence a passablement augmenté, mais il pourrait grimper bien davantage si une solution au conflit dans le golfe Persique n’est pas trouvée rapidement". Specialists are looking at a horizon of a few weeks before a possible new price spike, which leaves Quebec drivers exposed if the shipping chokepoint stays shut and supply stays constrained.
