Listen to this article
Average 4 minutes
The audio version of this article was created by AI-based technology. It can be mispronounced. We are working with our partners to continuously review and improve the results.
Brent crude oil prices briefly rose above $126 US a barrel early Thursday as stalled US-Iran talks raised doubts over the reopening of the Strait of Hormuz and a permanent end to the Iran war.
Brent crude for June delivery jumped 3.3 percent to $121.90 after briefly rising above $126 a barrel, the highest since March 2022. Brent for July delivery rose 1.4 percent to $112.02.
Before the war began in late February, Brent crude was trading at around $70 a barrel. Benchmark US crude rose 1.3 percent on Thursday to $108.28 a barrel.
There is no clear path to the end of the war. The US implemented a blockade of Iranian ports, raising oil prices. Thursday’s reports suggest that US President Donald Trump may have increased hopes that the conflict will end soon.
“The collapse of negotiations between the US and Iran, and President Trump reportedly rejecting Iran’s proposal to reopen the Strait of Hormuz, the market is losing hope for any immediate resumption of oil flows,” wrote ING Bank strategists Warren Patterson and Ewa Manthey in a research paper.
CBC business reporter Peter Armstrong explains why oil prices are so important to federal revenue after Prime Minister Mark Carney’s government released its spring economic statement.
Dismal Euro zone report
The US blockade comes after Iran successfully blocked the Strait of Hormuz, a waterway through which 20 percent of the world’s oil passes to customers from Persian Gulf producers.
The increase in oil prices was immediately reflected in gas station and jet fuel prices, although the impact varies by exposure to the strain. In the US, electricity prices are now below pre-war levels.
Rising oil prices boosted inflation in Europe in April. Annual inflation in the 21 countries that share the euro rose to 3.0 percent from 2.6 percent in March, boosted by a 10.9 percent increase in energy prices, the European Union’s statistics agency Eurostat reported on Thursday.
Meanwhile, euro area growth in the first three months of the year disappointed with a slight increase of 0.1 percent over the previous quarter.
ING’s head of macro global Carsten Brzeski said that another month of disruption in Hormuz could cause at least a slowdown in the euro economy.
Oil prices vary depending on the type of crude oil, where it is sold and under what conditions, in futures contracts. By some measures, Brent has reached its highest level since its peak of $147.50 per barrel in 2008 during the global financial crisis.
Front burner26:59How the petrodollar took over the world
The shock caused by the US-Israel war against Iran has made clear the extent to which the world economy is dependent on oil, and the US dollar. It’s not an accident. So today we will try to understand why the US and Saudi Arabia created this plan, and how hard it is being tested by this war. David Wight is our guest. He is a lecturer at the University of North Carolina Greensboro and the author of Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967-1988. For Front Burner documentation, please visit: []
As the war rocked global markets, the US dollar fell to 160.02 Japanese yen after rising on Thursday to its highest level in nearly two years. It closed at 160.44 yen on Wednesday.
The U.S. dollar has gained against other major currencies in part because of its status as a safe haven for investors in times of risk, and in part because U.S. interest rates remain high as the Federal Reserve struggles to balance the need to stimulate the economy by curbing inflation that is partly a result of the war.
The Fed’s decision to keep interest rates steady at its policy-making meeting on Wednesday continued to support the dollar.
