Canadian gas prices spike as Ukraine conflict prompts oil market chaos

Canadians can expect to pay more at the pump as Russia's attack on Ukraine puts even greater pressure on an already surging oil price environment.

Roger McKnight, chief petroleum analyst at En-Pro International Inc., expects gas prices across the country to rise approximately five cents per litre this weekend.

"If you are only filling up once a week or that sort of thing, get anything in your tank that you can before Saturday," McKnight said Thursday. "But if you're a daily filler, there's really not much you can do."

The high demand for oil combined with a shortage of supply has been pushing oil prices — and consequently gas prices — up for weeks.

The benchmark West Texas Intermediate price sat at $92 US per barrel Thursday afternoon after briefly trading above $100 US per barrel earlier in the day. Brent crude fell to $99 US a barrel, after topping $105 US a barrel for the first time since 2014 on Thursday morning.

Even if U.S. President Joe Biden attempts to intervene to calm the pressure on oil prices, the situation could still worsen, according to McKnight.

"OPEC+ is really Saudi Arabia and Russia together, and if President Biden puts pressure on Saudi Arabia to get more crude into the system to lower prices, that's just going to upset Russia even further and they may even shut down supply completely," McKnight said.

The ability for OPEC+ to respond in any meaningful way is limited anyway because of the oil cartel's struggle to keep up with its committed production increases, said Rory Johnston, founder of energy price newsletter Commodity Context. There is still much uncertainty around how tensions between Russia and Ukraine will play out and if there will ultimately be a loss of oil supply. If the crisis in eastern Europe does worsen, Johnston said the current deficit in the oil market could double, sending prices through the roof.

"I think you could absolutely see prices add $20, $30, $40 a barrel," he said.

Meanwhile, Canada on Thursday announced more sanctions on Russia, including the halting of all export permits, as well as financial penalties targeting banks, lawmakers and elites, despite Russia promising to retaliate against those who interfere with its operations in Ukraine.