The price of oil surpassed US$100 a barrel for the first time since July after attacks on oil facilities and ships in the Middle East threatened to debilitate an already weakened supply chain.
Brent crude, the international standard, jumped nearly three per cent to $100.72 early Wednesday.
U.S. benchmark crude gained 2.4 per cent to $95.25 a barrel, and U.S. gasoline prices rose sharply overnight.
The average price for a gallon of regular gasoline ticked up seven cents overnight to hit $4.22 a gallon, now more than a dollar above what it cost at this point last year, according to AAA.
Diesel prices, which can have an outsized impact on consumers because it is used in shipping and production, hit an all-time high Friday and has continued to climb since. The average price for a gallon reached $5.94 overnight and is now 9 cents higher than it was Friday.
In Canada, the national average price for regular grade gasoline hit CA$1.77 a litre Wednesday, up from $1.73 a week earlier, according to CAA.
Jet fuel has become so expensive that U.S. and international carriers have cut flights while raising fares and fees.
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Pain in the gas: Oil surges above $100/barrel again as Iran war reignites -
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Markets reacted after the U.S. military reported striking five Iranian tankers in response to attempted missile attacks on a Navy warship and after attacks by an Iranian-backed Houthi rebel group ignited fires at oil facilities in Saudi Arabia.
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Crude oil prices shot up after Israel and the United States initiated a war with Iran, and they have fluctuated considerably during the more than six months since then. The fighting has halted most shipping through the Strait of Hormuz, a narrow waterway through which a fifth of the world’s oil supply passed before the war began.
Brent traded between about $70 to $100 a barrel for much of March, April and May. In July, prices swung between $72 and $102, reflecting rising and falling hopes that the U.S. and Iran would agree on a plan that would allow stranded tankers to move oil safely out of the Persian Gulf.
“In our view, reaching a durable deal before the U.S. midterm elections is increasingly unlikely, and it could remain elusive even beyond that,” Bank of America analysts said in a Tuesday research note.
The analysts increased their oil price forecast for the second half of the year to $83 a barrel “in light of more persistent disruptions to Hormuz,” but said they still expected shipping through the strait to gradually pick up. If attacks keep a chokehold on traffic, prices could reach $95 to $120 a barrel, while damage to major energy infrastructure could produce spikes of up to $150 a barrel, the analysts wrote.
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Negotiations over a preliminary deal between the U.S. and Iran to end the conflict broke down over control of the Strait of Hormuz. Iran insists it has the right to set the terms and charge fees for ships traveling through the waterway off its coast. The U.S. wants passage to remain free and has used a Navy blockade to block Iran’s ports and oil tankers.
Recent stepped-up attacks by Yemen’s Houthis could constrain global oil supplies even more because they targeted an alternative shipping route that Saudi Arabia has relied on to transport oil during the war.
Higher energy costs have weighed on consumers, businesses and national economies this year, particularly outside of the U.S.
Refinery outages in Russia, reduced refining activity elsewhere and sharply declining inventories have pushed diesel and gasoline prices sharply higher globally, Bank of America said this week.
Yet rising prices may have an outsized impact on the upcoming U.S. midterm elections, now just eight weeks away.
– with a file from Global News’ Ariel Rabinovitch
As someone from eastern Canada, my observation is this is the second most awful, backward region in this country. Everyone is either super rich, or super poor. Most people have conservative views yet they vote against their interests and choose liberal. They want churches but vote to stop religious practices. They complain about housing prices and there being no good paying jobs, but vote to increase immigration. They say they love nature and the scenery but want it cut down for industry and urban sprawl. They say they care about the environment but want fossil fuel energy generating stations. They say they value privacy but want data centres that power AI surveillance. They hate America but shop at American grocery stores.
My portfolio is loving this. Sold oil when Trump was elected and bought gold. Trump starts a war so sold gold and bought oil and gas again. (Only Cdn producers though. Elbows up)
Eastern Canada voted for this, now we all suffer their consequences. Alberta out!
Yes Archie , you’re right. It was a statement from a pathetic idiot to the pathetic idiots that voted for him. Unfortunately nothing much has changed.
Just think if Canada had oil.
Don’t stop till you are finished the job USA and Israel, smash,smash, smash, smash iran into the ground
Boy, that quote from Trudeau that there is no business case for increasing gas production is aging well.
There are 300 billion barrels in the Alberta tar sands regions, so there is no shortage of oil. It is time to buy an EV.
All part of a managed decline and stock manipulation.
Really good for Alberta, which was facing a $10 billion deficit and now a $2 billion surplus thanks to Trump’s war against Iran. And just in time for the fall separation referendum, woot…!!!
Yup and it’s all Canada’s fault for Trump’s self made affordability crisis in the US! Hopefully the midterms completely blow Trump’s ship out of water in 8 weeks!