Gasoline prices in Canada rose Tuesday as oil prices hit their highest levels in nine months.
According to the price-monitoring website Gasbuddy.com the average price for regular gas in Canada was $1.2443 a litre, up from $1.2430 Monday as crude oil for March delivery closed at $105.84 US a barrel, up $2.60, or 2.5 per cent, in New York.
The more widely traded April contract settled at $106.25, up $2.65, oil's highest price since May.
Crude prices rose after European leaders agreed to lend Greece €130 billion ($172 billion Cdn) to avoid a debt default and as Iran laid out conditions for future oil exports to European countries.
Earlier in the week, Iran said it was halting sales to Britain and France in retaliation for a European Union embargo taking effect in July over Tehran's disputed nuclear program.
Foreign Ministry spokesman Ramin Mehmanparast said Tuesday that Iran seeks guarantees of payments, long term contracts and a ban on unilateral cancellation of contracts by buyers.
Tehran said Monday it was considering extending the oil embargo to other European countries
Avoiding a Greek default has led some analysts to conclude that the prospects for Europe’s economy have improved and that markets will now focus more on data that suggests the U.S. recovery is slowly picking up steam.
Crude has jumped from $96 US a barrel earlier this month and $75 in October as signs of an improving U.S. economy bolstered investor confidence.
However, analysts are concerned higher fuel costs could stifle consumer spending and undercut economic growth in the world's biggest economy and Canada's most important trading partner.
"A significant run-up in oil prices are an important contributor to an economic malaise," energy trader and consultant The Schork Group said in a report.
"With the U.S. economy starting to show signs of life, high prices now just might kill this recovery in the cradle."
Iran’s warnings also contributed to higher crude prices, according to a report from Commerzbank in Frankfurt.
"Since France and Britain purchased virtually no crude oil from Iran, the ban on shipments announced (Monday) has no significant consequences for Iran itself."
Higher prices, however, were "Iran's real intention, as this 'punishes' all EU countries for their boycott decision," Commerzbank said.
Gasoline futures gained along with crude in New York, with the March contract closing at $3.0615 a U.S. gallon, up 4.59 cents or 1.52 per cent from the last settlement on Friday, before the Presidents’ Day long weekend in the United States.
Gasoline futures have risen 1.4 per cent in the last week and have gained 14 per cent this year.
Higher gasoline prices on this side of the border would add to the burden already faced by Canadian consumers.
Retail spending data for December released by Statistics Canada Tuesday show gasoline stations' receipts rose 17.3 per cent over 2010, driven mainly by higher gasoline prices.
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