The value of Brent crude oil briefly exceeded $126 US a barrel recently, marking the highest point since March 2022. This surge was fueled by stalled discussions between the U.S. and Iran, casting uncertainty on the reopening of the Strait of Hormuz and a definitive conclusion to the Middle East conflict.
Currently, the price of Brent crude for June delivery stands around $111 US per barrel as of 4:15 p.m. on Thursday. Prior to the onset of the war in late February, Brent crude was trading at approximately $70 US per barrel.
Simultaneously, gasoline prices are on the rise. In Canada, the average cost of a liter of gas was $1.830 on Thursday afternoon based on GasBuddy data, reflecting a 4.5-cent increase from the previous day and a 47.9-cent surge compared to a year ago. Notably, British Columbia witnessed the highest prices, averaging slightly over $2 per liter.
Projections indicate a further escalation in costs. In the Greater Toronto Area, gas prices are anticipated to climb to $1.899 per liter, while Halifax and Edmonton might experience prices of $1.897 and $1.859 per liter, respectively.
In the U.S., the average gas price hovers around $4.375 per gallon. The ongoing war, characterized by Iran’s disruption of the Strait of Hormuz and U.S. port blockades, continues to drive oil prices upwards. Speculations of potential escalation by U.S. President Donald Trump have dampened hopes for a swift resolution to the conflict.
Market analysts from ING Bank highlighted that the breakdown in U.S.-Iran talks, coupled with Trump’s reported rejection of Iran’s proposal on the Strait of Hormuz, has led to pessimism regarding a prompt resumption of oil flows. Trading activities involving various oil contracts across several months persist, with Brent crude hitting $114.70 overnight for July delivery before retracting to $110.40.
Amid the war, the highest price achieved for the most actively traded Brent contract during the conflict is $119.50. The financial markets in North America displayed positive momentum on Thursday following robust earnings reports from major companies like Alphabet. The S&P 500 surged by one percent, reaching a new all-time high, while the Dow and Nasdaq composite rose by 1.6 percent and 0.9 percent, respectively.
Companies such as Caterpillar, Eli Lilly, O’Reilly Automotive, and Royal Caribbean witnessed stock price boosts after exceeding analysts’ profit expectations for the latest quarter. Treasury yields eased in the bond market following the retreat of oil prices from their significant overnight gains.
International stock markets demonstrated mixed performances. The FTSE 100 in the UK climbed by 1.6 percent after the Bank of England maintained its main interest rate at 3.75 percent to evaluate the economic repercussions of the Iran conflict. Meanwhile, Germany’s DAX and France’s CAC 40 rose by 1.4 percent and 0.5 percent, respectively, with the European Central Bank holding its interest rates steady. In Asia, most stocks experienced declines, with Hong Kong’s Hang Seng dropping by 1.3 percent and the Shanghai Composite index edging up by 0.1 percent.
