It was another roller coaster day in international oil markets Monday — and Toronto area drivers will likely see the same kind of ups and downs at the gas pump.
Oil prices shot up past $100 (U.S.) a barrel Monday as the U.S. began its blockade of the Strait of Hormuz, but then gave up much of those gains as U.S. President Donald Trump claimed that Iran wanted “to work out a deal.”
The price of West Texas Intermediate oil rose as high as $105.63 (U.S.) a barrel, but by 4 p.m. had dropped back down to $98.14, still a gain of more than 1.6 per cent on the day. Brent Crude rose as high as $103.86, before falling back to $98.49, still a gain of more than three per cent.
The average price of gasoline at Greater Toronto Area pumps is more than $1.72 a litre, according to Gasbuddy.com.
Veteran oil industry analyst James Williams said the uncertainty is here for a while, and says this level of consistent volatility is something he’s never seen in his 46 years in the business.
“Even when OPEC was playing games, you didn’t get day to day swings from OPEC decisions,” said Williams, founder of WTRG Economics. “The roller coaster is around for a while.”
After peace talks between Iran and the U.S. fell apart in Pakistan over the weekend, Trump vowed to block Iranian oil from flowing through the Strait, which normally carries 20 per cent of the world’s supply of crude.
Since the initial U.S.-Israeli strike Feb. 28, Iran had been blockading non-Iranian oil from flowing through.
The latest U.S. move could push China and India to put pressure on Iran to end its own blockade, but there’s no guarantee it will work, said Williams.
“This potentially hurts China and India, who are big buyers of Iranian oil,” Williams said. “And it also hurts China, which is a big supplier of weapons to Iran. But this could just make Iran more determined.”
Every U.S. dollar per barrel increase in the price of oil results in roughly a one-cent Canadian increase in the price of gasoline at the pumps, Williams estimated.
“If the situation stays the same,” Williams said, “we could easily get to $120 per barrel within a couple of weeks.”
Monday’s crude price volatility will likely be reflected at the gasoline pumps within days, Williams said.
With so much of the world’s oil supply off the market, the price of crude could soon hit $120 (U.S.) a barrel, Williams warned which would mean prices at the pump could soon close in on $2 a litre.
The U.S. military said Monday it would stop any ship seeking to enter or leave Iranian ports.
“The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman,” U.S. Central Command said in a post on X.
“I have also instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas,” Trump said Sunday, referring to Tehran’s move to charge ships for safe passage.
The Iranian government, however, threatened to continue its blockade of ships carrying non-Iranian oil through the Strait.
“Security in the Persian Gulf and the Sea of Oman is either for everyone or for NO ONE,” the Islamic Republic of Iran Broadcasting reported Monday. “NO PORT in the region will be safe,” according to a statement from the Iranian military and the Revolutionary Guards.
The speaker of the Iranian parliament, meanwhile, taunted Trump about the impact of the U.S. blockade.
Mohammad Bagher Ghalibaf, posted a map of gas prices at stations near the White House on X, adding “enjoy the current price of gasoline. With what is being called a ‘blockade,’ you will soon miss $4 to $5 gasoline.”
With files from Star wire services
