Air Canada said Friday it will suspend its flights from Toronto and Montreal to New York’s John F. Kennedy International Airport later this year due to surging jet fuel costs.

The airline said in an email the suspension will begin on June 1, with plans to resume on Oct. 25.

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“As we regularly do, we monitor and review our network to ensure that routes are meeting profitability targets,” an Air Canada spokesperson said.

“As jet fuel prices have doubled since the start of the Iran conflict and some lower profitability routes and flights are no longer economic, we are making schedule adjustments accordingly.”

Customers affected by the suspensions will be contacted with alternate travel plans, the spokesperson said.

The airline will continue to offer service to New York’s LaGuardia Airport and Newark Liberty International Airport in New Jersey from six cities, including Toronto and Montreal.

More to come…

Oil prices fell sharply Wednesday morning amid news Iran has agreed to reopen the Strait of Hormuz as part of its two-week-long ceasefire with the United States.

But when that will translate to price drops at Canadian gas pumps remains unclear as shipping companies scramble to get their products to market.

Benchmark U.S. crude sank US$16.47 to US$96.48 a barrel Wednesday morning; Brent crude, the international standard, dropped US$13.79 to US$95.48 a barrel.

The national average for regular, unleaded gas in Canada was $1.82.4 per litre Wednesday morning – an increase of two cents from Tuesday, CAA data showed.

The drops reversed some of the rise in oil prices, following the start of the war in late February, which had effectively blocked passage through the strait that’s a crucial route for global supplies.

Late Tuesday, Trump said he was holding off on his threatened attacks on Iranian bridges, power plants and other civilian targets. Iran’s foreign minister said passage through the strait would be allowed for the next two weeks under Iranian military management.

Tim Waterer, chief market analyst at KCM Trade, told The Associated Press the development has sparked “cautious optimism” rather than “outright celebration.”

“The ceasefire is only two weeks long, and markets will be watching closely to see whether shipping through the Strait of Hormuz normalizes as promised and whether the fragile truce can pave the way for a more durable peace agreement,” he added.

1:51
Canadian farmers face soaring diesel, fertilizer costs amid Iran war

Trump acknowledged late Tuesday a 10-point proposal from Iran on ending the war, which he called “a workable basis on which to negotiate” a long-term peace deal despite rejecting it a day earlier. Iran’s clauses included an end to conflicts in the region, a protocol for safe passage through the Strait of Hormuz and lifting of sanctions and reconstruction.

Prime Minister Benjamin Netanyahu said in a statement Wednesday that Israel backed the U.S. ceasefire with Iran but that the deal doesn’t cover fighting against Hezbollah in Lebanon.

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His office said Israel also supports U.S. efforts to ensure Iran no longer poses a nuclear or missile threat.

Earlier Tuesday, Trump warned that “a whole civilization will die tonight” if Iran did not meet his deadline of 8 p.m. Eastern to agree to a deal with the U.S. and reopen the Strait of Hormuz.

“I don’t want that to happen, but it probably will,” Trump said in a Truth Social post Tuesday morning, 12 hours ahead of his deadline.

However, he added that there was potential for something “wonderful” to happen in Tehran.

“However, now that we have Complete and Total Regime Change, where different, smarter, and less radicalized minds prevail, maybe something revolutionarily wonderful can happen, WHO KNOWS?” he added.

1:21
Carney urges ‘all parties’ in Iran war to ‘respect international laws’

Iranian officials had vowed “an unforgettable hit” and “immediate and proportionate reciprocal measures” if Trump carried through with his threats. Iranian President Masoud Pezeshkian took to social media on Tuesday to announce that he had registered for military service, along with 14 million Iranians.

Pakistan, which was working towards mediating a ceasefire, urged Trump to extend his deadline and Iran to open the Strait of Hormuz.

Trump’s threat against Iran’s civilization came after he vowed to bomb every Iranian power plant and bridge over the weekend unless Iran, and dismissed concerns that such actions could amount to a war crime.

Volker Türk, the United Nations high commissioner for human rights, called Trump’s latest threats “sickening” in a statement.

Prime Minister Mark Carney said Tuesday that Canada “expects all parties in this conflict” to respect international law.

“That means not targeting, certainly, civilians or civilian infrastructure. And we urge all parties in this war to follow those responsibilities as a point we’ve made publicly and privately,” he said.

Trump’s shifting deadlines for the conflict had raised uncertainty over where the conflict was headed as it entered its second month.

2:42
Iran war’s impact spreads through Middle East

On March 21, Trump issued his first ultimatum to Tehran, giving them 48 hours to allow ships to pass through the Strait of Hormuz, which Iran had blocked in response to U.S. and Israeli strikes.

Trump posted on Truth Social that if Iran doesn’t “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS.”

Iran had until the evening of March 23.

However, 12 hours before that deadline, Trump took to Truth Social again to announce that he had decided to postpone the strikes against Iran.

“I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD,” he wrote, adding that was subject to the success of the discussions.

That pushed the deadline out to the end of that week.

On March 26, just before the deadline, Trump first doubled down on his threats, adding that there was “NO TURNING BACK.”

Later that day, however, he postponed his deadline another 10 days to April 6 at 8 p.m. Eastern.

On March 30, Trump put celebrating progress in the talks with Iran while also expanding his threatened bombing if a deal wasn’t “shortly reached,” adding that “it probably will be.”

“We will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!),” he wrote.

On Easter Sunday, in an expletive-laden post on Truth Social, Trump threatened Iran’s power plants and bridges if they did not open the Strait – and extended his deadline once again for 24 hours.

“Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!!” Trump said, warning Iranians to “open the Fuckin’ Strait, you crazy bastards, or you’ll be living in Hell – JUST WATCH!”

Shortly after that, he simply posted: “Tuesday, 8:00 P.M. Eastern Time!”

He confirmed to reporters Monday that the time referred to his final deadline.

— with files from Reggie Cecchini and the Associated Press and Reuters

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.

“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.

“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.

“So over the next few weeks, places that need those fuels aren’t going to be getting them.”

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

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“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.

“The whole global market right now is totally upset, and people are still trying to understand what it all means.”

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.”

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.

“I’m seeing more and more talk about supply chains breaking down like happened during COVID.”

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.

“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.

“When that crude goes missing, it affects the diesel supply more and this is the challenge because not all crude oil is the same.”

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.

“This is what’s going to happen over the coming weeks as this (crisis) deepens.”

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Prices at many Edmonton gas stations have jumped to about $1.50 per litre for regular gasoline, as the conflict in the Middle East drives up the price of oil.

Wholesale gasoline has risen roughly 20 cents since Tuesday while diesel is up nearly 40 cents — which energy analyst Dan McTeague said has a much wider impact.

“Those prices are going to be making their way throughout the entire economy,”  said McTeague, who is the president of the advocacy group Canadians for Affordable Energy.

“The reality is, diesel is at the core of the global economy — the global economy’s workhorse — and as we’ve seen an increase of about 20-25 per cent of its value just in the past 96 to 120 hours, it’s likely to have a much longer-lasting impact on affordability and inflation in Canada.

“Diesel prices affects everything.”

The jump at the pump coincides with global oil prices, which have soared in the days following the joint attack by the United States and Israel on Iran.

2:09
How the Iran war is disrupting the Strait of Hormuz, oil and gas prices

Iran responded by closing 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 — going so far as threatening to set ships on fire if they enter the strait.

About 13 million barrels of oil per day normally move through the waters — about 25 per cent of global oil shipments. It’s not just oil: about 20 per cent of the world’s total liquified natural gas (LNG) supply also comes through this route.

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

On Monday, March 2, Brent Crude — the global benchmark — reached about US$79 per barrel before declining slightly, about eight per cent higher than last week’s prices. By Friday, it had jumped up to nearly $93US a barrel.

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Meanwhile West Texas Intermediate, the North American benchmark, started the week at US$71 per barrel — a six per cent increase over the weekend — before ending the week increasing to $90US a barrel.

It’s the biggest weekly gain since Russia invaded Ukraine, said Richard Masson, an industry analyst and former CEO of the Alberta Petroleum Marketing Commission.

“The global energy market right now is in turmoil, nobody knows what’s going to happen next,” Masson said.

For Canada, the conflict is likely to lead to not just higher prices for gasoline and diesel, but increased prices for imported goods, according to Warren Mabee, director of the Queen’s University Institute for Energy and Environmental Policy.

Although Canada is a net oil exporter, Mabee said domestic fuel prices are tied to global benchmarks and reflect international volatility while at the same time, the Canadian oil patch often benefits from higher global prices. Elevated prices can boost revenues and investment in the sector, even as consumers face higher costs at the pump.

It also boosts the Alberta government’s bottom line.

The price of oil tends to make or break the province’s budget, which is heavily reliant on royalties from oil and gas operations in the province.

Last week, the provincial government projected a $9.4-billion deficit for the coming year, based predominantly on what, at the time, were slagging oil prices of US$60.50 per barrel.

1:52
Alberta projects $9.4B deficit with no plan to balance budget

Masson said this week’s increase, if sustained for a length of time, could mean hundreds of millions — if not billions — more into provincial coffers than what was expected when the budget was announced.

So far, though, there’s no sign of operational changes within the private sector.

“We haven’t seen any indication that investment will grow up or jobs will grow, but it means a higher level of profitability for the companies and that translates into higher royalties and taxes,” Masson said.

Alberta’s finance ministry on Friday said in a statement it’s too early to determine whether recent fluctuations will have an impact on the budget.

“Higher prices can support resource revenues if they are sustained, but it’s important to remember that revenues are driven by monthly average prices over time, not daily trading levels.”

Masson said the disruption to shipping and the prospect of reduced flows through key routes will keep upward pressure on global oil prices until the situation eases.

“Until this conflict resolves in a way that we can view Iran as less hostile, I don’t think there are going to be many ships moving through there, so oil prices globally are going to continue to ratchet up as long as this carries on,” Masson said.

McTeague says that means consumer gas and diesel prices will also continue to increase.

“Next week we might see prices go even higher — another 10 to 12 cents at least on the gasoline side, and probably another 20 cents on the diesel side.”

5:01
Analysts expect energy prices to spike as the war in the Middle East drags on

Canada could have avoided being affected so much if it invested more in getting its own oil and gas resources to the global market, McTeague argues.

“An energy-rich country has become consumer poor and has become totally dependent on unreliable outcomes,” he said.

— with files from Lauren Krugel, The Canadian Press

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Stocks sank on Wall Street Thursday after the price of oil spiked to its highest level since the summer of 2024 because of the war with Iran.

The S&P 500 fell 0.6% and erased what had been a small gain for the year so far. The Dow Jones Industrial Average briefly dropped more than 1,100 points before finishing with a loss of 784, or 1.6%. The Nasdaq composite slipped 0.3%.

The S&P/TSX composite index was down 332.89 points at 33,609.97.

The losses came as financial markets around the world keep following the cue of oil prices. Sharp increases there are raising worries that a long-term surge could grind down the global economy, exhaust households’ ability to spend and push interest rates higher.

The price for a barrel of benchmark U.S. crude shot up 8.5% Thursday to settle at $81.01 per barrel. Brent crude, the international standard, climbed 4.9% to $85.41 per barrel and is likewise near its highest price since 2024.

Oil prices gave back some of those gains later in the day, which helped stocks in the U.S. moderate their losses at the end of trading. But worries nevertheless remain high about how long disruptions will last for oil production because of the escalating war with Iran.

Prices at U.S. gasoline pumps have already leaped because of them. The average price for a gallon is $3.25, up 9% from $2.98 a week ago, according to auto club AAA.

U.S. President Donald Trump said on Thursday that he was not concerned about rising gas prices, telling Reuters in an exclusive interview that the U.S. military operation was his priority.

“I don’t have any concern about it,” he said when asked about the higher prices at the pump. “They’ll drop very rapidly when this is over, and if they rise, they rise, but this is far more important than having gasoline prices go up a little bit.”

Trump later said further action to reduce pressure on oil was imminent.

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“The oil seems to have pretty much stabilized,” he said during an unrelated event at the White House. “We had it very low, but I had to take this little detour,” referring to the decision to strike Iran.

A senior White House official told reporters the U.S. Treasury Department is expected to announce measures as soon as Thursday aimed at combating rising energy prices, including potential action involving the oil futures market.

If oil prices spike further, like to $100 per barrel, and stay there, some analysts and investors say it could be too much for the global economy to withstand. Uncertainty about what will happen has caused frenetic swings across financial markets this week, sometimes hour by hour.

2:00
Oil prices surge as Iran war threatens supply

Much will depend on what happens with the Strait of Hormuz. Roughly a fifth of the world’s oil typically sails through the narrow waterway off Iran’s coast.

To be sure, the U.S. stock market has a history of bouncing back relatively quickly following conflicts in the Middle East and elsewhere, as long as oil prices don’t jump too high for too long. That has many professional investors suggesting patience and riding through the market’s swings.

“While further escalation remains a risk, we think the more likely outcome is an increase in market risk aversion that likely lasts only a short time until investors can see a winding down of hostilities,” according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

The S&P 500 is down only 0.7% for the week so far, despite its sharp swings, as gains for Big Tech stocks and oil producers have helped to blunt losses across the rest of the market.

Stocks of airlines fell to some of the U.S. market’s worst losses again on Thursday. Higher oil prices are increasing their already big fuel bills, while the war has left hundreds of thousands of passengers stranded across the Middle East.

American Airlines lost 5.4%, United Airlines fell 5% and Delta Air Lines sank 3.9%.

Stocks of smaller companies, meanwhile, took heavy hits. That’s typical when worries are growing about the strength of the economy and about interest rates rising. The Russell 2000 index of the smallest stocks fell a market-leading 1.9%.

Wall Street’s drop would have been worse if not for Broadcom. The chip company’s stock rose 4.8% after it reported stronger profit and revenue for the latest quarter than analysts expected. It’s one of Wall Street’s most influential stocks because it’s one of the biggest by total value, and CEO Hock Tan said it benefited from a 74% jump in revenue for AI chips.

All told, the S&P 500 fell 38.79 points to 6,830.71. The Dow Jones Industrial Average dropped 784.67 to 47,954.74, and the Nasdaq composite slipped 58.50 to 22,748.99.

In the bond market, Treasury yields climbed as rising oil prices put more upward pressure on inflation, which could keep the Federal Reserve from cutting interest rates.

The yield on the 10-year Treasury rose to 4.13% from 4.09% late Wednesday and from just 3.97% before the war with Iran started.

The Fed could keep interest rates high to keep a lid on inflation. But high interest rates would also keep it more expensive for U.S. households and companies to borrow money, which would grind down on the economy.

The central bank had indicated it planned to resume its cuts to interest rates later this year, in hopes of giving a boost to the job market and economy. Because of the war and higher oil prices, traders have pushed their forecasts further into the summer for when the Fed could begin cutting rates again.

In stock markets abroad, indexes rebounded in Asia following historic losses the day before. South Korea’s Kospi soared 9.6% to recover much of its 12.1% plunge from Wednesday, which was its worst drop ever.

But indexes fell in Europe as oil prices began to accelerate. France’s CAC 40 fell 1.5%, and Germany’s DAX lost 1.6%.

AP Writers Kim Tong-hyung and Elaine Kurtenbach contributed. Additional files from Reuters.

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As concerns rise over high oil prices due to the war in Iran, Canada’s oil-producing provinces could actually see revenue increase.

The price for a barrel of crude topped USD$73 in the early morning on Monday, up from less than $64 on Feb. 26. As of Tuesday afternoon, that number had jumped to about $74.83.

For Alberta, which has projected a $9.4-billion deficit for the 2026-27 fiscal year, the oil price shift could mean a decrease in that large number.

“If prices stay in the low 70s, our deficit could drop into the $3 billion range and that would be helpful,” said Richard Masson, former chief executive officer of the Alberta Petroleum Marketing Commission.

“But we don’t know what’s going to happen and so I wouldn’t count on that yet.”

In its budget, Alberta had projected West Texas Intermediate — considered the lifeblood benchmark oil price for the province’s economy — to average $60.50 a barrel in the upcoming fiscal year.

Alberta Finance Minister Nate Horner told reporters when the budget was released that if oil prices stay low indefinitely, the structural deficit would become “extremely obvious.”

An exact estimate is difficult to predict, but Alberta Premier Danielle Smith told reporters on Monday a change is possible from the $4.1 billion deficit estimated for the current fiscal year.

“I suspect that rather than a $4.1 billion deficit that we were projecting in the budget, it might be somewhat less than that,” Smith said.

A day later, Horner told reporters a sustained period of high oil prices would help.

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“An extra month at elevated prices would have a dramatic impact,” he said Tuesday. “I don’t want to speculate on how much that will change things for this year, but we know it will help, we know we’re on the right side of it.”

It would depend how long the increased prices last, Horner said, and if it stays at that level it would “help the books.”

University of Calgary economist Trevor Tombe said it’s common that when a major item produced by a province sees the price go up, it’s a good economic story.

“At the end of the day, a lot of the resources we produce in Canada are owned by provincial governments,” he said.

“So when the value goes up, that does mean more revenue to the government and the effect can actually be enormous.”

1:57
How the Iran war impacts inflation, energy prices, even your mortgage

Tombe said in the case of Alberta, every $1 per barrel change is equal to about $680 million to the government’s bottom line.

With the price of $74 per barrel of crude about $14 above the provincial estimate, it could equal $30 million per day to the government’s bottom line.

He added if that held for the month of March, that could equal up to $1 billion for the final month of the 2025-26 fiscal year.

“That basically means that if it holds, of course for an entire year, and who knows what the future holds, but if it holds it may very well have a balanced budget,” Tombe said.

Next door in Saskatchewan, another oil-producing province, the impact may differ.

In last year’s budget, the province estimated oil and natural gas revenue at $1.1 billion. It also estimated a barrel of oil at US$71 in the 2025-26 budget.

“The price of oil has jumped in the last few days, nobody anticipated that a month ago,” said Saskatchewan Finance Minister Jim Reiter.

Reiter noted to reporters the province has tried not to rely too much on natural resources and that remains the goal.

Tombe noted to Global News that the province is less reliant on oil compared to Alberta, but he estimated an equivalent change for Saskatchewan would amount to about $800 million.

“Oil prices matter for Saskatchewan, but the size of the effect is much, much smaller than in Alberta which means … they don’t face the same kind of volatile budget that Alberta does,” he said.

Saskatchewan’s finance minister said any budget-specific questions would be deferred until budget day, March 18.

Even though high oil prices could boost provincial budgets, everyday Canadians could still be hit hard both at the gas pump and in their wallet, Tombe cautioned.

“When the price of anything that we buy goes up, that does lower our purchasing power,” he said. “The increase in oil prices that we’re seeing now, if that lasts, then we may very well see inflation rise.”

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