Trump’s Iran War Has Added US$17 Billion to Canada’s Fuel Bill, New International Study Finds

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Canada may be one of the world’s largest oil producers, but that has not insulated Canadian households and businesses from the economic shock created by the war with Iran. A new international analysis estimates that disruptions to global energy markets since U.S. and Israeli strikes began on February 28 have added roughly US$17 billion to Canada’s fuel bill.

The finding comes from the Centre for Research on Energy and Clean Air, which examined fuel prices and consumption across 169 countries. Canada recorded the third-largest additional national cost in the study, behind only the United States and China. Canadian government data independently show how dramatically conditions have changed: gasoline prices were 27.8% higher in September than a year earlier, helping keep inflation above the Bank of Canada’s target.

What the US$17 Billion Estimate Actually Measures

The US$17-billion figure does not represent money Ottawa has spent, nor is it a government estimate of the direct fiscal cost of the conflict. CREA calculated how much more consumers across the world have been spending on fuel by comparing gasoline and diesel prices before major disruptions to the Strait of Hormuz with prices from early March through mid-October. Its analysis covered 169 countries and estimated a worldwide additional fuel bill of US$468 billion. The United States accounted for US$160 billion, China for US$54 billion and Canada for US$17 billion.

Canada’s inclusion near the top is striking given its population. Statistics Canada estimated 41.8 million people were living in the country on July 1. Dividing CREA’s national estimate by that population produces a rough figure of about US$407 per resident. That is only a way of illustrating the scale—not an estimate of what every Canadian personally paid, since fuel consumption varies enormously among households, businesses, truck fleets, farms and industries.

A Shipping Chokepoint Became a Canadian Cost Shock

The connection between fighting thousands of kilometres away and a Canadian filling station runs through the Strait of Hormuz. Before the conflict, approximately 20 million barrels of crude oil and petroleum products passed through the narrow waterway each day, equal to roughly one-quarter of global seaborne oil trade. U.S. and Israeli strikes on Iran began February 28, followed by Iranian retaliation and severe restrictions on Gulf shipping. U.S. Energy Information Administration estimates show Hormuz oil flows falling from 21.6 million barrels per day in the fourth quarter of 2025 to just 4.9 million in the second quarter of 2026.

Some traffic has since returned. The International Energy Agency estimated Hormuz flows reached 10.9 million barrels per day in September as producers expanded alternative routes and ship-to-ship transfers. Yet the recovery remains fragile. Tankers continue to face security threats and extraordinary freight costs, while refined-product exports from the Middle East have recovered far more slowly than crude shipments. That bottleneck matters directly to gasoline and diesel buyers worldwide.

Why Being an Oil Producer Did Not Protect Canada

Canada’s enormous crude reserves can make high domestic fuel prices appear counterintuitive. The country ranked fourth globally in crude oil production in 2025, and western Canadian production averaged about 5.1 million barrels per day. Yet crude oil in the ground is not the same thing as gasoline or diesel available at a local station. Canada has 16 refineries capable of processing approximately 1.9 million barrels of crude per day, and those facilities operated at roughly 90% of capacity in 2025. Regional supply still depends on imports, pipelines, marine shipments and internationally priced refined products.

The Canada Energy Regulator reported that Canadian refined-petroleum-product imports reached 485,000 barrels per day in 2025, worth C$21.4 billion. Nearly 80% came from the United States. Canada also imported 506,000 barrels of crude per day, despite producing far more crude than it consumes nationally. Geography explains much of the contradiction: refineries in eastern provinces cannot necessarily access western Canadian production as cheaply or easily as overseas or U.S. supplies.

The Shock Is Already Visible in Canadian Inflation

The international study’s conclusions are consistent with Canada’s own price statistics. Statistics Canada reported that gasoline prices were 27.8% higher in September 2026 than a year earlier, accelerating from a 22.8% increase in August. Energy prices overall were up 19%, while fuel oil and other fuels climbed 57.8%. Transportation prices rose 8.4%. Those increases helped push headline Consumer Price Index inflation to 3.1%, even as inflation excluding gasoline was considerably lower at 2.2%.

The distinction matters because it shows how much of Canada’s current inflation problem is tied to energy. The Bank of Canada had already estimated in July that higher gasoline prices could add roughly 1.4 percentage points to inflation at their peak during the second quarter. By September, the Bank was warning that the longer elevated oil prices and refinery margins persisted, the greater the danger that the initial fuel shock would spread into other goods and services. For households, the effect begins at the pump but does not necessarily end there.

Diesel Spreads the Cost Far Beyond the Gas Pump

Gasoline prices are the most visible expression of the energy shock, but diesel is potentially more consequential for the broader economy. Trucks carrying groceries, construction materials and manufactured goods rely heavily on diesel, as do substantial parts of the farming, mining and industrial sectors. The IEA estimated that global diesel and gasoil availability during the third quarter was about 1.7 million barrels per day lower than a year earlier. Diesel benchmarks, while below September’s record highs, remained close to twice their pre-crisis levels in the agency’s October assessment.

Higher transportation costs can gradually migrate into the prices consumers see elsewhere. The Bank of Canada’s third-quarter Business Outlook Survey found that firms continued to identify higher fuel costs linked to the Middle East war as a source of pressure on non-labour expenses. Roughly half of surveyed businesses said they intended to pass some or all of their larger war- and tariff-related cost increases to customers. That process helps explain why an energy disruption can eventually affect expenses far removed from driving.

Atlantic Canada Faces an Especially Difficult Energy Squeeze

The burden is not distributed evenly across the country. Statistics Canada specifically noted that the sharp rise in fuel oil prices during September had a greater effect on consumers in Atlantic Canada, where heating oil remains more widely used. That means some households face an energy shock not only when filling a vehicle but also when heating a home. September’s overall inflation rate reached 5.7% in Prince Edward Island, 5.6% in Nova Scotia, 5.0% in New Brunswick and 4.7% in Newfoundland and Labrador, compared with 3.1% nationally.

Energy was not the sole reason for those provincial inflation rates, and other regional costs also matter. Still, Statistics Canada said faster price growth in several provinces was driven mainly by gasoline and fuel oil. The experience illustrates one limitation of treating the US$17-billion estimate as a uniform burden. A city resident who drives infrequently may experience comparatively little direct impact, while a rural household with long commuting distances, oil heating and fuel-intensive work can encounter the shock repeatedly throughout a normal month.

Electric Vehicles Offer a Buffer, but Most Cars Still Burn Fuel

CREA argues that economies using less gasoline and diesel are better protected when international oil markets are disrupted. Canada is moving in that direction, although the existing vehicle fleet remains overwhelmingly dependent on combustion engines. Statistics Canada reported that zero-emission vehicles represented 13% of new vehicle sales in August 2026, up from 8.8% a year earlier. Second-quarter registrations of new ZEVs increased 26.7% year over year and accounted for 10.7% of all new registrations.

The installed fleet tells a different story. In 2025, zero-emission models represented only 3.5% of Canada’s 25.3 million registered light-duty vehicles. That leaves millions of existing cars, SUVs, vans and pickups directly exposed to oil-price shocks for years. CREA illustrated the difference using U.S. drivers: it estimated that a typical gasoline-car driver there incurred about US$440 in additional fuel costs during the crisis, compared with an approximately US$17 rise in charging costs for a typical EV driver. The precise Canadian numbers differ, but the exposure mechanism is similar.

The US$17 Billion Number Comes With an Important Caveat

CREA’s finding is best understood as an estimate of additional fuel expenditure associated with the post-Hormuz price shock—not as an audited invoice proving that exactly US$17 billion would have remained in Canadians’ pockets without the war. The methodology compares retail fuel prices in January and February with prices after the disruption began. For countries including Canada, the researchers generally used 2023 fuel-consumption levels because complete 2026 consumption data are not yet available. Retail fuel-price information came from the international database GlobalPetrolPrices.com.

That approach captures the extraordinary rise that followed the conflict, but it cannot isolate every possible influence on fuel prices. CREA itself points to both higher crude prices and shortages of refining capacity, including disruptions extending beyond Iran. What can be independently verified is the broader direction: Canadian gasoline prices have risen sharply, the Bank of Canada has repeatedly connected that increase to the Middle East conflict, and international energy agencies continue to report constrained fuel supplies. The exact US$17-billion figure is therefore best treated as a research estimate—with a very visible real-world price shock behind it.

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