The cost of Brent crude oil briefly spiked above $126 US per barrel recently, marking the highest level since March 2022. This surge was driven by uncertainties surrounding the reopening of the Strait of Hormuz and the ongoing conflict in the Middle East as talks between the U.S. and Iran hit a standstill.
The price of Brent crude for June delivery has since retreated to around $111 US per barrel as of 4:15 p.m. on Thursday. Prior to the commencement of the conflict in late February, Brent crude was trading at approximately $70 US per barrel.
Simultaneously, gasoline prices are on the rise. In Canada, the average price of a liter of gas stood at $1.830 on Thursday afternoon, representing a 4.5-cent increase from the previous day and a 47.9-cent surge compared to a year ago. British Columbia recorded the highest average price, exceeding $2 per liter.
Forecasts indicate a further increase in gas prices. Predictions for the Greater Toronto Area suggest prices could climb to $1.899 per liter, while Halifax and Edmonton may see prices reaching $1.897 and $1.859 per liter, respectively.
Across the border in the U.S., the average gas price hovers around $4.375 per gallon. The ongoing conflict, characterized by Iran’s control of the Strait of Hormuz and the U.S. blockade of Iranian ports, has significantly impacted oil prices. Reports hinting at potential escalations by U.S. President Donald Trump have dashed hopes for a swift resolution to the conflict.
Market analysts from ING Bank pointed out that the breakdown in negotiations between the U.S. and Iran, coupled with Trump’s reported rejection of Iran’s proposal regarding the Strait of Hormuz, has dampened expectations for a quick resumption of oil supplies. Trading activities revolving around various oil contracts have seen fluctuations, with the price of Brent crude for July delivery peaking at $114.70 before settling at $110.40.
Amidst the prevailing uncertainties, stock markets in North America experienced upward movements following positive earnings reports from major companies like Alphabet. The S&P 500, Dow, and Nasdaq composite indices all recorded gains, with the S&P 500 surpassing its previous all-time high.
Meanwhile, in the bond market, Treasury yields eased following the retreat in oil prices after their initial surge. Global stock markets displayed mixed performances, with the FTSE 100 in the UK climbing 1.6% while Germany’s DAX and France’s CAC 40 rose by 1.4% and 0.5%, respectively. Asian markets, however, witnessed a decline, with Hong Kong’s Hang Seng slipping by 1.3% while the Shanghai Composite index closed marginally higher by 0.1%.