Oil prices continue to rise while stock markets fall Tuesday as the war sparked by the U.S. and Israel spreads across the Middle East.
By 1 p.m. West Texas Intermediate had risen $4.45 to $75.70 (U.S.) per barrel, an increase of just over six per cent. That was down off its morning peak of $77.69
Brent Sea Crude was up $4.75 to $82.49, also an increase of just over six per cent, after having risen as high as $84.96 earlier in the day.
By 1 p.m., the TSX Composite Index plunged 2.35 per cent to 33,733 points, wiping out $128 billion in stock value.
In New York, the S&P 500 was down 1.3 per cent to 6,789 points, erasing $817 billon (U.S.) in value.
Airline shares around the world were also down, with many commercial flights in the Mideast being cancelled because of the war.
In the U.S., shares of both United Airlines and American Airlines were down by more than two per cent. In Toronto, Air Canada shares were off by more than one per cent.
With Iran continuing to threaten oil shipments through the key Strait of Hormuz, as well as its attacks on countries across the Middle East which host a U.S. military presence, some analysts predict the price of crude oil could rise as high as $100 (U.S.) per barrel.
“WTI prices could rise toward $80–$100/bbl, potentially exceeding $100 temporarily if disruptions are prolonged,” TD economist Marc Ercolao wrote in a research report.
With roughly 20 per cent of the global oil supply — and 30 per cent of the world’s liquified natural gas — normally being shipped through the Strait of Hormuz, alternative routes can handle only part of the volume and for a relatively short time, Ercolao noted.
“While alternative pipelines in Saudi Arabia and the UAE could redirect an estimated five million barrels per day, these routes are insufficient to fully offset a prolonged disruption,” Ercolao wrote. “Even a short-lived closure would likely result in prices ratcheting higher with each day of interruption, while insurance and freight premiums could keep prices elevated even after physical flows resume.”
For each $1 (U.S.) rise in the price of crude, there’s roughly a one cent (Canadian) rise in the price of gasoline at the pumps, veteran oil industry economist James L Williams, president of WTRG Economics told the Star earlier this week.
Israel stepped up airstrikes against Iranian missile launchers and factories Tuesday, and Iran retaliated across the Gulf region, disrupting energy supplies and travel.
As explosions rang out in Tehran and in Lebanon — where Israel said it struck Hezbollah militants — the American embassy in Saudi Arabia came under drone attack.
In a post on X, a regional security analyst said it’s clear Iran is motivated to attack any oil or liquid natural gas moving through the Strait of Hormuz.
“Regional energy infrastructure is now a priority target for Iran,” wrote Martin Kelly, head of the advisory group at EOS Risk. “Following Iran’s comments ‘not a single drop of oil will leave the Gulf,’ we must consider that all Gulf region energy, oil and port infrastructure is at HIGH risk of Iranian (and possibly proxy) attack.
A report in FreightWaves, a shipping news website, said at least six ships carrying oil or gas have been hit by Iranian strikes since Saturday, and that several global container companies have stopped all cargo bookings in the Middle East.
With files from Star wire services
