The value of Brent crude oil briefly surged above $126 US a barrel recently, marking its highest level since March 2022, before retracting. This surge occurred due to stalled negotiations between the U.S. and Iran, casting doubt on the reopening of the Strait of Hormuz and a definitive resolution to the conflict in the Middle East.
The price of Brent crude scheduled for delivery in June has now decreased to approximately $111 US per barrel as of 4:15 p.m. on Thursday. Prior to the outbreak of the conflict in late February, Brent crude was trading at around $70 US per barrel.
Simultaneously, gasoline prices are on the rise. In Canada, the average cost for a liter of gas stood at $1.830 on Thursday afternoon, as reported by GasBuddy. This reflects an increase of 4.5 cents from the previous day and a significant jump of 47.9 cents compared to a year ago. Notably, prices were highest in British Columbia, averaging slightly above $2 per liter.
Projections indicate further increases in costs. In the Greater Toronto Area, gas prices are anticipated to climb to $1.899 per liter, while Halifax and Edmonton could witness prices of $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 escalation in oil prices stems from the ongoing conflict, where Iran has restricted the Strait of Hormuz and the U.S. has imposed blockades on Iranian ports. Reports indicating a potential escalation by U.S. President Donald Trump have dampened hopes for a swift resolution to the conflict.
Market analysts from ING Bank noted that the breakdown in talks between the U.S. and Iran, coupled with President Trump’s rejection of Iran’s proposal regarding the Strait of Hormuz, has led to a loss of market confidence in the swift resumption of oil flows.
Trading in oil contracts remains active, with prices for Brent crude reaching $114.70 per barrel for July delivery before retreating to $110.40. Despite minor fluctuations, prices remain elevated compared to pre-conflict levels.
In North America, stock markets experienced gains following strong earnings reports from major companies like Alphabet. The S&P 500 surged one percent, surpassing its previous record high, while the Dow increased by 1.6 percent, and the Nasdaq composite rose by 0.9 percent.
Companies such as Caterpillar, Eli Lilly, O’Reilly Automotive, and Royal Caribbean witnessed stock rallies after exceeding analysts’ profit expectations in the latest quarter.
In the bond market, Treasury yields eased as oil prices relinquished their significant overnight gains.
Internationally, stock market performances varied. The FTSE 100 in Britain climbed 1.6 percent after the Bank of England maintained its main interest rate at 3.75 percent to evaluate the economic repercussions of the conflict. Germany’s DAX saw a 1.4 percent return, and France’s CAC 40 rose by 0.5 percent following the European Central Bank’s decision to keep interest rates stable.
Asian stock markets displayed mixed results, with Hong Kong’s Hang Seng declining by 1.3 percent while the Shanghai Composite index closed with a 0.1 percent increase.