Brent crude settled at $109.55 on October 19, within 31 cents of the five-month high reached three days earlier, and the Canadian cost is already in the data. Gasoline prices rose 27.8% from a year earlier in September, the largest single driver of a 3.1% headline CPI that the Bank of Canada must weigh when it decides on October 28.
Brent has gained 13.8% since its September 21 close of $96.24. Kpler estimates that crude flows through the Gulf averaged about 8.5 million barrels a day last week, down from more than 20 million the week before, and Reuters counts at least 10 confirmed incidents involving commercial vessels.
How Hormuz Reaches the Canadian CPI
The mechanism is short. Disrupted flows lift Brent, Brent lifts the wholesale price of gasoline and diesel, and the pump price enters Statistics Canada data within weeks. The September energy index rose 19% from a year earlier and fuel oil rose 57.8%, while inflation excluding gasoline eased to 2.2%. Governor Tiff Macklem has warned that energy prices will lift the Bank of Canada inflation forecast.
The physical evidence of disruption is specific. US Central Command says an Iranian Revolutionary Guard Corps projectile struck the Singapore-flagged GFS Pride on October 13; the ship caught fire and sank under tow the next day, and all 21 crew were evacuated. On Sunday the Revolutionary Guards said a tanker exploded after hitting a naval mine in the strait, a claim that Central Command disputes, saying main routes are clear of mines and that more than 40 ships transited in 24 hours.
S&P Global reports that war-risk insurance has risen from roughly 1% to 3% of hull value to between 7.5% and 10%, a cost that applies even to vessels that complete the transit.
The Saudi Bypass Is Now a Target
Saudi Arabia ships crude to Yanbu on the Red Sea through the East-West pipeline specifically to bypass Hormuz. Saudi forces intercepted missiles over the Red Sea on Friday, one of them aimed at the Yanbu export terminal. The Houthis claimed attacks on an Aramco facility at Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh and Abha airport. Saudi authorities have not confirmed the claims, and Reuters could not verify them.
The implication does not depend on whether any single claim proves accurate. A strike that reaches Yanbu would remove the escape route that limits the damage from a Hormuz closure. Egypt has said it is ready to support Saudi Arabia, but its parliament delayed until October 26 a vote that would authorize the armed forces to assist.
Daily settlement prices for front-month Brent crude futures in US dollars per barrel, 21 trading days to October 19, 2026. Event markers show the October 13 strike on the GFS Pride and the October 16 waiver of some sanctions and tariffs on Russian energy exports.
Waiver, Midterms and the Range of Outcomes
President Trump signed an order on Friday waiving some sanctions and tariffs on Russian energy exports, an effort to lower energy prices before the November 3 midterms. Brent fell as much as $3 during Monday trading, with a high of $110.70 and a low of $106.82, before it settled almost unchanged. Priyanka Sachdeva of Phillip Nova said the waiver "did little to address supply disruptions in Hormuz," and Gelber and Associates said uncertainty over its terms and duration limits confidence that more Russian fuel will reach the market.
Bjarne Schieldrop of SEB warned that any increase in Hormuz export volumes may be short-lived, because Iran could escalate before the midterms. Forecasters remain far below the current price. Goldman Sachs, through Daan Struyven, holds a base case of about $80 Brent in the fourth quarter, with prices above $120 if attacks on Hormuz persist and about $125 in December in a severe scenario. JPMorgan cites fair value near $90.
The distinction matters. At $109.55, the market is pricing a disruption well beyond the base cases of major forecasters, which treat the current level as a tail outcome that normalizes. The next ten days contain four tests: the Egyptian vote on October 26, the Federal Reserve decision on October 27 and 28, the Bank of Canada decision on October 28, and US elections on November 3.