While the war in Iran has sent gasoline prices soaring around the world, there are growing concerns about how the spike in the cost of other fuels could also affect consumers and the broader economy.

In Canada, the average price of diesel has surged to nearly $2.30 per litre — more than 50 per cent higher than just three months ago.

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“It’s unprecedented. We’ve never seen anything like this in the oil market or the refined products market and it’s getting worse,” said Calgary-based petroleum industry analyst Richard Masson.

“The tankers that left four weeks ago just before the war started are just starting to unload at their destinations,” he continued.

About 13 million barrels of oil per day normally move through the Strait of Hormuz at the mouth of the Persian Gulf — one of the busiest and most strategically significant shipping routes in the world and a key oil choke point — about 25 per cent of global oil shipments.

The closure has disrupted oil and gas shipments from the region and rattled markets around the world.

“It takes three to four weeks to get where they’re going, but over the last four weeks there have been no tankers leaving out of the Strait of Hormuz.

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Masson said the refined products market is experiencing prices like $200 a barrel for diesel fuel.

“And more than that, countries like China have banned exports of refined products. So there are places like California, that depend on refined products coming from China because they’ve had many refineries shut down, who are now scrambling to find replacements for their diesel, for their gasoline.

Small business owners in Alberta are also waiting to see what happens, depending on how long the war drags on.

“Well, the price is going to affect freight and delivery, for sure,” said Ernie Tsu of the Alberta Hospitality Association, who is also owner of the Trolley 5 Brewpub in Calgary.

“We haven’t seen it come down yet from the major suppliers. I’m sure it’s going to,” said Tsu, who admits restaurant menu prices will need to increase if freight and delivery charges increase.

However, Tsu said a lot of restaurants are working with local farmers in an effort to keep transportation costs down and still provide excellent products and that helps “massively.”

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Masson said if diesel prices get too high, it could cause the entire supply chain to break down.

“There’s two parts to that. One is the price gets higher for transportation because of the diesel cost and so that gets transmitted through to prices,” said Masson.

“The other is people just can’t get hold of the product physically and so they stop shipping things and so the supply chains start to break down.

While the members of the International Energy Agency recently agreed to release hundreds of millions of oil from their strategic emergency reserves in an effort to combat a possible shortage of Middle East oil, Masson said it may not help prevent a shortage of diesel, because it’s not the right kind of oil.

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“The Middle East produces kind of a medium-sour crude, and that crude goes into refineries and makes a larger proportion of diesel and a smaller proportion of gasoline.

While much of the oil produced in Canada is suitable for making diesel, Masson said most of the recent increase in U.S. production is lighter oil obtained through fracking, and is not suitable for making diesel.

“We have this real problem where not only is there a smaller supply of crude, but it’s not the right kinds of crude in the right refineries to keep production of things like diesel going at the rate we need — and of course, the economy depends on diesel,” said Masson.

“So we we have to find a way to adjust our consumption and the way we do that is by price. So the higher the price goes, more people will stop using it and only the best uses will happen.

Consumers struggling with higher gas prices as a result of the Iran war may wonder: with talk of negotiations toward a potential ceasefire, how long would it take to feel relief if the conflict ends?

Since the war began nearly a month ago, gas prices have spiked as a knock-on effect of higher oil prices.

“If you’re low on gas, I’d fill up because I don’t think you’re going to see a resolution of this in the next three or four, five days,” says Jon Allen, a senior fellow at the Bill Graham Centre for Contemporary International History at the University of Toronto.

“I think if there’s going to be a negotiation, it’s going to take some time.”

About 20 per cent of the world’s supply of crude oil has been choked off in the Strait of Hormuz, a vital shipping channel in the Persian Gulf region that Iran has been using for leverage by threatening any ships allied with the U.S. and Israel that try to pass through.

At one point during the conflict, some crude oil prices reached nearly US$120 per barrel.

Amid the volatility of ceasefire proposal talks and Iran’s rejection of the U.S. proposal on Wednesday, the price has continued to fluctuate but hovers around $90 as of publication.

“Energy markets are famously volatile and it has always been impossible to predict where things will go because it’s a market where small changes in supply can have big changes in price, and a lot hinges here on how long that lasts,” says Trevor Tombe, a professor of economics at the University of Calgary.

“We see big moves in oil prices up and down, sometimes just depending on what the president tweets one day or another. So it’s really hard to see where we go from here, but it does look like oil prices have fallen a lot in the past couple of days, just on the prospects of potential peace.”

1:49 Trump prepared to ‘unleash hell’ if Tehran does not accept defeat, White House says

On Wednesday, Iran dismissed the idea that the war could pause, let alone end anytime after receiving an American proposal for a ceasefire.

That came after Trump said on Tuesday that the U.S. was “in negotiations right now” with Iran.

At the same time, the Associated Press reports that at least 1,000 U.S. troops are being sent to the Middle East in the coming days.

All of this uncertainty means consumers shouldn’t expect gas prices to come down anytime soon because the future of the Middle East conflict, and more specifically the reopening timeline for the Strait of Hormuz is unclear.

“These things change every day,” says Allen.

“Donald Trump can say whatever he wants, and he can offer whatever he wants, but if Iran doesn’t like it, they’ve got a stranglehold on the Strait of Hormuz.”

When it comes to negotiations between the U.S. with Israel and Iran, Allen says, “they’re pretty far apart.”

This means the war may not be ending anytime soon, and even if a proposed ceasefire or end to the war is in the works, consumers may be paying for the conflict for weeks or even months after. That’s because there is a lagging effect that higher prices for resources like oil and fertilizer can have on prices consumers wind up paying for things like gas and groceries.

“A lot does depend on how long oil prices remain high for. For food, you typically see a six to nine month lag between producer cost changes and consumer price changes,” says Tombe.

“If oil prices do fall back to where they were, and I don’t believe anyone’s predicting that will occur, then instead of seeing affordability ease, we’ll just avoid affordability worsening.”

–with a file from the Associated Press

Iran’s defiance came as Israel launched airstrikes on Tehran and Washington deployed paratroopers and more Marines to the region.

Iranian state television’s English-language broadcaster, Press TV, quoted an anonymous official as saying Iran rejected America’s ceasefire proposal. Press TV’s report came after Pakistan transmitted the proposal to Iran.

“Iran will end the war when it decides to do so and when its own conditions are met,” Press TV quoted the official as saying. The official added Tehran will continue its “heavy blows” across the Mideast.

Earlier, two officials from Pakistan described the 15-point U.S. proposal broadly, saying it addressed sanctions relief, a rollback of Iran’s nuclear program, limits on missiles and reopening the Strait of Hormuz, through which a fifth of the world’s oil is shipped.

An Egyptian official involved in the mediation efforts said the proposal also includes restrictions on Iran’s support for armed groups. The officials spoke on condition of anonymity to discuss details not yet released.

Some of those points were nonstarters in negotiations before the war: Iran has insisted it won’t discuss its ballistic missile program or its support of regional militias, which it views as key to its security. And its ability to control passage through the Strait of Hormuz represents one of its biggest strategic advantages.

Iran’s attacks on regional energy infrastructure along with its restrictions on the strait have sent oil prices skyrocketing and sparked fears of a global energy crisis, in turn putting pressure on the U.S. to find a way to end the chokehold and calm markets.

2:16 Trump says US had ‘very strong talks’ with Iran, delays power plant strikes for 5 days

At least 1,000 troops from the 82nd Airborne Division will be sent to the Mideast in the coming days, three people with knowledge of the plans told The Associated Press. They spoke on condition of anonymity to discuss sensitive military plans.

The paratroopers are trained to jump into hostile or contested areas to secure key territory and airfields.

The Pentagon is also in the process of sending about 5,000 more Marines, trained in amphibious assaults, and thousands of sailors to the region.

The 15-point plan now in Iranian hands is “a comprehensive deal” to reach a ceasefire, according to the Egyptian official.

Mediators are pushing for possible in-person talks between the Iranians and the Americans, perhaps as soon as Friday in Pakistan, the Egyptian and Pakistani officials said.

Trump has said the U.S. is “in negotiations right now” and that the participants included special envoy Steve Witkoff, his son-in-law Jared Kushner, Secretary of State Marco Rubio and Vice President JD Vance. He has not disclosed who from Iran they are in contact with, but said “the other side, I can tell you, they’d like to make a deal.”

Press TV, like all of state TV channels controlled by hard-liners, offered its own five-point plan from the official who rejected the US proposal.

It included a halt to killings of its officials, means to make sure no other war is waged against it, reparations for the war, the end of hostilities and Iran’s “exercise of sovereignty over the Strait of Hormuz.”

Those measures, particularly reparations and its continued chokehold over the Strait of Hormuz, likely will be unacceptable to the White House as energy supplies worldwide remain affected by the war.

Israeli officials, who have been advocating for Trump to continue the war against Iran, were surprised by the submission of a ceasefire plan, according to a person who was briefed on the contours of the proposal and spoke on condition of anonymity because they were not authorized to speak publicly.

Any talks between the U.S. and Iran would face monumental challenges. It’s not clear who in Iran’s government has the authority to negotiate — or would be willing to, as Israel has vowed to continue killing the country’s leaders.

Iran remains highly suspicious of the United States, which twice under the Trump administration has attacked during high-level diplomatic talks, including with the Feb. 28 strikes that started the current war.

“We have a very catastrophic experience with U.S. diplomacy,” Iranian Foreign Ministry spokesperson Esmail Baghaei told India Today on Tuesday.

14:57 ‘Months if not years’ for oil prices to normalize if Iran war ends now: Expert

The Israeli military said Wednesday afternoon it had completed several waves of airstrikes in Tehran. The army also said that as part of its strikes a day earlier it targeted an Iranian submarine development center in Isfahan.

“There have been some days when the bombings are so intense you can’t do anything,” a 26-year-old graduate student in Tehran said, adding his friends mostly stayed at home. He spoke on condition of anonymity because of security fears.

Missile alert sirens sounded multiple times in Israel as Iran launched its own attacks.

Drone and rocket fire from the Iran-back Hezbollah militant group continued unabated. Since entering the fighting, the group has fired rockets into northern Israel around the clock each day, disrupting the lives of hundreds of thousands of people.

Iran also kept up the pressure on its Gulf Arab neighbors. Saudi Arabia’s Defense Ministry saying it had destroyed at least eight drones in the kingdom’s oil-rich Eastern Province, and missile alert sirens sounding in Bahrain.

Kuwait said it shot down multiple drones but the General Civil Aviation Authority said one hit a fuel tank at Kuwait International Airport, sparking a fire that sent a huge plume of smoke into the sky.

Iran’s death toll has passed 1,500, its Health Ministry has said. Israel says 20 people have died in the war, including two soldiers in Lebanon. At least 13 U.S. military members have been killed, along with more than a dozen civilians in the occupied West Bank and Gulf Arab states.

Authorities say more than 1,000 people have died in Lebanon, where Israel has targeted the Iran-linked Hezbollah militant group, which has also fired on Israel.

In Iraq, where Iranian-supported militant groups have also entered the conflict, 80 members of the security forces have been killed, a top security adviser, Khalid al-Yaqoubi, said.

2:02 World’s energy watchdog warns of unprecedented disruption to global oil market

The news of potential negotiations drove down the price of oil. Brent crude oil, the international standard, has neared US$120 a barrel during the conflict but was trading below US$100 Wednesday. It is still up around 35 per cent from the start of the war.

Reports of efforts to end fighting also buoyed stock markets, with the S&P 500 rising just over one per cent in early trading.

Economists and leaders have warned of far-reaching effects if energy prices remain high — from rising prices on food and other basics to higher rates for mortgages and auto loans.

A big driver of the spike in the oil price has been Iran’s stranglehold on the Strait of Hormuz. Iran has allowed a small number of ships through the strait, but has said no ships from the U.S., Israel or countries seen as linked to them can pass.

Asked in the interview with India Today whether Iran was charging ships for passage, Baghaei, the Iranian Foreign Ministry spokesperson, said “absolutely.” He did not elaborate.