Small increase expected to gas prices after Saudi attack, says analyst

Petroleum analyst Dan McTeague says drivers whose vehicles run on gas got lucky after attacks took out half of Saudi Arabia’s daily oil production.

“We dodged a bullet. We pulled a miracle out of the sky. Turns out this happened the same week that Canada’s fuel regulations changes from the summer blends to the winter blends,” McTeague said Monday.

McTeague said those winter blends are cheaper to produce, by about four cents per litre.

As a result, increases to gas prices in Canada will be blunted and should only jump by two or three cents per litre after the attacks in Saudi Arabia.

However, McTeague said diesel does not go through the same switch so he’s expecting prices to jump six cents per litre by Wednesday.

“Trains, planes and automobiles that run on diesel will be hit a little more disproportionately,” he said.

“If you happen to be transporting equipment, you may want to think about topping up before Wednesday because that’s the start of what could be several days of increases at a time when diesel prices go up anyways.”

Half of Saudi Arabia’s daily oil production has been disrupted, or about 5.7 million barrels per day, and McTeague said that won’t be easily replaced.

“This is a serious issue. If Saudi Arabia can’t get off the mat and continues to have a production issue for the next several weeks, it’s going to draw down global supplies of oil,” he said.

“The U.S. can’t do it. Canada certainly can’t do it because of all of the years of blocking pipelines … Going forward, I think we’re going to see prices move up a little higher unless the situation improves.”

With files from Associated Press