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Tag: Strait of Hormuz oil disruption

  • Stocks Rally as Oil Prices Retreat Amid Ongoing Iran Conflict Fears

    Stocks Rally as Oil Prices Retreat Amid Ongoing Iran Conflict Fears

    Global markets showed signs of relief Monday as oil prices dropped and stocks climbed, even as uncertainty surrounding the war involving Iran continues to drive volatility in financial markets.

    The S&P 500 rose 1.2 per cent and was on track for its strongest performance in five weeks. The Dow Jones Industrial Average gained about 484 points, or 1 per cent, while the Nasdaq Composite climbed 1.4 per cent as investors reacted to falling oil prices.

    Benchmark U.S. crude oil dropped 4 per cent to about $94.75 per barrel after earlier surpassing $102 during morning trading. Meanwhile, Brent crude, the global oil benchmark, slipped 1.6 per cent to $101.52 after earlier reaching $106.50 per barrel.

    Oil markets have been extremely volatile since the United States and Israel launched strikes against Iran. In response, Tehran has nearly halted shipping traffic through the strategic Strait of Hormuz, a narrow waterway that carries roughly one-fifth of the world’s oil supply from the Persian Gulf to global markets.

    The disruption has raised concerns among economists and investors that prolonged closure of the strait could push energy prices higher and trigger a new wave of global inflation.

    Over the weekend, U.S. President Donald Trump called on other countries affected by the disruption to help secure the shipping lane. Trump said nations relying on Middle Eastern oil should “take care of that passage,” while promising that the United States would assist in reopening the route.

    Despite the geopolitical tensions, investors remain cautiously optimistic that markets will recover if oil prices stabilize. Historically, U.S. stocks have rebounded quickly from Middle East conflicts, provided energy costs do not remain elevated for long periods.

    Even after recent swings triggered by the conflict, the S&P 500 remains only about 4 per cent below its all-time high.

    Analysts at Wells Fargo Investment Institute noted that the rapid escalation in hostilities may also signal growing constraints on both sides, potentially limiting the duration of the conflict.

    Several companies sensitive to fuel prices led gains on Wall Street as oil costs eased. Shares of Norwegian Cruise Line Holdings rose 4.8 per cent, while United Airlines climbed 4.2 per cent as investors anticipated lower operating expenses.

    Storage company National Storage Affiliates surged 27.2 per cent after Public Storage announced a $10.5 billion all-stock deal to acquire the company’s 69 million rentable square feet of storage facilities.

    Retailer Dollar Tree also gained 6.2 per cent after reporting stronger-than-expected quarterly profits despite a drop in store traffic.

    Technology stocks continued to benefit from the artificial intelligence boom. Nebius Group jumped 13.3 per cent after announcing a five-year cloud infrastructure contract with Meta Platforms that could be worth up to $27 billion.

    Meanwhile, AI chip giant Nvidia rose 2.5 per cent ahead of a speech by CEO Jensen Huang, who is expected to unveil new products tied to the rapidly expanding AI industry.

    International markets also moved higher. Germany’s DAX gained about 1 per cent, while stocks in Hong Kong rose 1.4 per cent. Markets in Shanghai slipped slightly, falling 0.3 per cent.

    In the bond market, yields eased as lower oil prices reduced some inflation fears. The yield on the 10-year U.S. Treasury dropped to 4.22 per cent from 4.28 per cent on Friday, though it remains higher than the 3.97 per cent level seen before the war began.

    Investors also pushed back expectations for interest rate cuts by the Federal Reserve as higher energy prices complicate efforts to control inflation. According to data from CME Group, traders see almost no chance the central bank will cut interest rates at its upcoming policy meeting this week.

  • Bank of Canada Faces Tough Rate Decision Amid Weak Jobs Data and Oil Price Shock

    Bank of Canada Faces Tough Rate Decision Amid Weak Jobs Data and Oil Price Shock

    The Bank of Canada is preparing to make its second interest rate decision of 2026 while navigating a surge of new economic data and growing uncertainty tied to global trade tensions and the war in the Middle East.

    Economists say policymakers face a difficult balancing act as signs of economic weakness collide with rising inflation risks driven by a sharp jump in global oil prices.

    The central bank’s policy rate currently stands at 2.25 percent after officials chose to hold rates steady in January. However, the economic landscape has shifted significantly in the weeks since that decision.

    New data released by Statistics Canada showed the country’s unemployment rate rose to 6.7 percent in February after the economy unexpectedly lost 84,000 jobs, marking the biggest monthly employment decline in four years.

    Economic growth has also weakened. Statistics Canada reported that Canada’s economy contracted by 0.5 percent on an annualized basis in the fourth quarter of 2025, falling short of the central bank’s earlier forecast of flat growth.

    Monetary policymakers will also examine fresh inflation data before making their decision. Doug Porter, chief economist at BMO, said inflation could drop to about 1.8 percent in February, partly because last year’s temporary federal tax holiday on consumer goods is no longer distorting year-over-year comparisons.

    Financial markets currently expect the central bank to keep rates unchanged, with data from LSEG Data & Analytics showing about a 92 percent probability of a hold. However, the odds of a rate cut increased slightly following the weak February jobs report.

    Some economists believe the bank will remain on the sidelines for the rest of 2026 as the economy adjusts to tariffs imposed by the administration of Donald Trump in the United States.

    Randall Bartlett, deputy chief economist at Desjardins, said recent data suggests the economy has been weak but not weak enough to justify immediate interest rate changes.

    The situation has been further complicated by geopolitical tensions after U.S. and Israeli strikes on Iran triggered a wider regional conflict. Iran’s attacks on commercial shipping and its blockade of the Strait of Hormuz—a critical route that carries roughly a fifth of the world’s oil supply—have sent global oil prices soaring.

    Higher crude prices are already pushing up fuel costs in Canada and are expected to feed into broader inflation in the coming months through transportation, packaging and fertilizer costs tied to food production.

    Food inflation was already elevated at 7.3 percent annually in January, driven by supply shortages affecting products such as coffee and beef.

    Porter warned that the energy price surge could further increase grocery prices and strain Canada’s food supply chain.

    The economic impact of the oil shock could vary across Canada. Energy-producing provinces such as Alberta, Saskatchewan and Newfoundland and Labrador may benefit from higher oil prices, potentially boosting regional economic output. Other provinces, however, could face slower growth as higher energy costs ripple through the broader economy.

    While some markets are beginning to price in a possible rate hike later this year, Bartlett believes such expectations may be premature if the oil shock proves temporary.

    Analysts say the outlook for interest rates will likely depend on how Tiff Macklem, governor of the Bank of Canada, frames the impact of the Middle East conflict and global trade tensions during this week’s policy announcement.

  • Iran Launches Fresh Missile Strikes on Israel and U.S. Bases as Middle East Conflict Escalates

    Iran Launches Fresh Missile Strikes on Israel and U.S. Bases as Middle East Conflict Escalates

    Iran launched a new wave of attacks Thursday targeting Israel, U.S. military bases and other locations across the Middle East, dramatically escalating the regional conflict and raising fears of a wider war.

    Air raid sirens sounded in Tel Aviv and Jerusalem as Israeli authorities reported multiple incoming missile attacks. Iranian state television also claimed that additional strikes were directed at American bases across the region.

    At the same time, Israel said its military carried out a series of strikes against Iranian targets and Iranian-backed forces. Israeli officials said they hit long-range ballistic missile launch sites inside Iran and attacked 80 targets linked to the Hezbollah militant group in Lebanon over the past 24 hours.

    Iran’s Foreign Minister Abbas Araghchi accused the United States Navy of committing what he called an “atrocity at sea” after an American submarine sank the Iranian frigate IRIS Dena in the Indian Ocean. According to Sri Lankan authorities, 87 Iranian sailors were killed in the incident, while 32 crew members were rescued.

    “Mark my words: The U.S. will come to bitterly regret the precedent it has set,” Araghchi said in a social media post.

    In a rare and inflammatory statement broadcast on Iranian state television, senior cleric Ayatollah Abdollah Javadi Amoli called for retaliation against Israel and former U.S. President Donald Trump, escalating tensions further.

    The war began Saturday when U.S. and Israeli forces launched a coordinated campaign targeting Iran’s leadership, missile stockpiles and nuclear facilities. The strikes killed Iran’s Supreme Leader Ayatollah Ali Khamenei and severely damaged parts of the country’s military infrastructure. While officials have hinted that regime change could be a long-term goal, the precise objectives and timeline of the campaign remain unclear.

    So far, the conflict has killed more than 1,000 people in Iran, over 70 in Lebanon and around a dozen in Israel, according to officials from those countries. Six U.S. soldiers have also died since the fighting began.

    The conflict is increasingly spilling across the region. In Azerbaijan, a drone crashed near the airport in the exclave of Nakhchivan, while another drone fell close to a school, injuring two civilians. Authorities in Qatar temporarily evacuated residents near the U.S. Embassy in Doha after reports of a missile attack on the city.

    Saudi Arabia also reported intercepting a drone near its border with Jordan, while a commercial tanker came under apparent attack off the coast of Kuwait early Thursday. The United Kingdom Maritime Trade Operations center said an explosion occurred near the vessel but did not confirm the cause.

    Since the conflict began, attacks have also occurred in the Gulf of Oman and the Strait of Hormuz, a critical global shipping route through which roughly one-fifth of the world’s oil supply passes.

    Oil prices surged again Thursday after briefly stabilizing earlier in the week. Brent crude, the international benchmark, has risen about 15 percent since the conflict began as Iranian attacks and military activity disrupt shipping through the strait.

    The Iranian warship sunk by the U.S. Navy had been returning from multinational naval exercises hosted by India in February. The United States also participated in the exercise with a P-8A Poseidon aircraft used for surveillance and anti-submarine operations.

    U.S. Defense Secretary Pete Hegseth confirmed that an American submarine fired the torpedo that sank the vessel.

    Meanwhile, Israel said it continues to target Hezbollah positions in Lebanon. Among the 80 targets struck in the past day were several command centers in Beirut used by the Iran-backed group.

    Lebanese officials reported that eight people were killed in Israeli strikes Thursday, including casualties in the Beddawi refugee camp in Tripoli and along a coastal highway. Earlier drone strikes in Beirut’s southern suburbs also hit two vehicles, killing three people and injuring six.

    Despite the continued missile threats, Israeli authorities announced they were easing some nationwide restrictions, allowing workplaces to reopen if shelters are nearby. Schools across the country, however, remain closed as the conflict continues.