WATCH: Texas refinery explosion adds pressure to already surging oil and gas prices

CALGARY — An explosion at the Valero oil refinery in Port Arthur, Texas, on Monday is underscoring the growing volatility in global energy markets as oil and gas prices continue to rise due to the US-Israel-Iran conflict, heightening concerns over supply chain disruptions.Reuters reports the explosion happened around 7:30 p.m. local time, causing a blaze that burned for nearly five hours, which sent large plumes of smoke into the air and shook homes miles away, prompting a temporary shelter-in-place order for nearby residents..According to Jefferson County Sheriff Zena Stephens, the explosion may have been caused by an industrial heater. Officials later confirmed the fire was extinguished by Tuesday, with no injuries reported.The refinery — Valero’s largest in Texas and one of the largest on the Gulf Coast — employs roughly 770 workers and processes up to 435,000 barrels of oil per day (bpd). The incident comes as heightened geopolitical uncertainty around the ongoing conflict with Iran continues and tanker traffic is still being disrupted through the Strait of Hormuz — a critical chokepoint for global oil shipments..As of Tuesday in the US, the national average for gasoline stood at $3.977 per gallon, according to the American Automobile Association (AAA), with the diesel average at $5.345 per gallon.Oilprice.com says these figures compare with $3.126 per gallon of gasoline a year ago and $3.597 per gallon of diesel in late March 2025.The spike is raising concerns across multiple sectors, particularly agriculture, where higher diesel costs could drive up food costs..In Canada, fuel prices are also up in recent weeks, with the national average reaching 173.9 cents per litre as of Tuesday, according to Canadian Automobile Association (CAA) figures.On Tuesday, Calgary-based Enverus Intelligence Research (EIR) released new projections suggesting oil prices could remain high for an extended period of time.The firm now expects Brent crude to average $95 per barrel for the remainder of 2026 and rise to $100 per barrel in 2027, “due to accelerating global stock draws and an unresponsive supply outlook.”“The world has an oil flow problem that is draining stocks. Whenever that oil flow problem is resolved, the world is left with low stocks,” Al Salazar, director of research at EIR, said in a media release.“That’s what drives our oil price outlook higher for longer. With consolidation and stricter capital discipline reshaping the shale patch, we expect a much more restrained US supply response than in previous $100/bbl environments.”EIR estimates that each month of disruption in the Strait of Hormuz could increase oil prices by $10 to $15 per barrel, “highlighting the historic significance of the disruption and high uncertainty on duration.”The firm also believes that even with West Texas Intermediate (WTI) prices at $90–$100 per barrel, US oil producers are “not expected to materially increase output” in the foreseeable future, with global oil demand growth for 2026 reduced to approximately 500,000 bpd, down from 1 million bpd.WTI is currently trading at $92.66, with Brent hovering around $104 at the time of writing.

WATCH: Texas refinery explosion adds pressure to already surging oil and gas prices

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