Rising fuel costs, spurred by the ongoing conflict in Iran, are beginning to significantly impact Canadian businesses, according to a recent survey. The Canadian Federation of Independent Business (CFIB) released its Business Barometer report for March, revealing that higher overall costs are a primary reason for a drop in business optimism. Fuel costs specifically saw the largest monthly jump among factors contributing to overall cost pressures, with 50 percent of survey respondents citing it, up 14 percentage points.
The Iran war has disrupted approximately 20 percent of the world's oil supply by effectively closing the Strait of Hormuz, a vital shipping channel in the Persian Gulf region. This disruption has caused a surge in fuel costs for both consumers and businesses. Christina Santini, CFIB's director of national affairs, notes that businesses will face tough choices regarding day-to-day operations, wage increases, employment levels, and pricing. Many businesses are already experiencing "insufficient demand" from customers, further contributing to the decline in overall business optimism.
The survey indicated a significant deterioration in business confidence, with the long-term confidence index (12-month outlook) dropping nine percentage points to 55.8 percent, and the short-term confidence index (three-month outlook) falling about seven percentage points to 54.5. The rising cost of diesel is particularly concerning, as it is the backbone of Canada's freight sector. As of mid-March 2026, average Canadian diesel prices had risen from 166.3 cents/L to 199.7 cents/L within weeks and were expected to surpass 206 cents/L.
Evan Erlandson, Owner and President of E2 Trucking, stated that the increase in fuel prices translates to about $2,000 a month in additional costs for an operator running their truck 9,000 miles. While some businesses may absorb the higher costs initially, consumers will likely see sticker prices rise as these expenses are passed down. The situation is compounded by existing challenges, such as high insurance costs (65 percent), tax and regulatory expenses (61 percent), and wage costs (59 percent).
