Oil prices spike to highest levels in years as Iran war intensifies
CBC
Oil prices spiked to near $120 US per barrel before falling back on Monday as the Iran war intensified, threatening production and shipping in the Middle East and pummelling financial markets.
The price for a barrel of Brent crude, the international standard, surged to $119.50 US per barrel early in the day but later was trading near $106 per barrel, up 14 per cent, before the opening bell.
West Texas intermediate, the light, sweet crude oil produced in the United States, soared above $119.48 per barrel but fell back closer to $103.
Oil depots in Tehran smoldered following overnight strikes by Israel. The war's toll on civilian targets grew as Bahrain accused Iran of striking a desalination plant vital to drinking water supplies.
Bahrain's national oil company declared force majeure for its shipments after an Iranian attack set its refinery complex ablaze. The legal declaration releases the company of contractual obligations because of extraordinary circumstances.
"Do not discount the severity of this escalation. Even if, just say, Trump comes in and calms the market, the impact of this I think will last for years to come," said June Goh, senior oil market analyst for Sparta Commodities, during an interview with CBC News on Sunday evening.
"There will be a reshuffling of strategy from many Asian players, there will be need for diversification and obviously Canada will be well-poised to be there," she added.
Oil prices have surged as the war, now in its second week, ensnares countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.
Prices moderated after the Financial Times reported that some members of the Group of Seven industrial nations were considering releases of strategic oil reserves to alleviate pressure on the markets.
French President Emmanuel Macron said Monday that "the use of strategic reserves is an envisaged option." He said G7 leaders could meet this week to coordinate a response to climbing energy prices.
France currently holds the rotating presidency of the G7 group. Separately, finance ministers from the G7 nations are meeting Monday by video conference to discuss the repercussions from the war.
On Saturday, U.S. President Donald Trump downplayed the idea of turning to America's Strategic Petroleum Reserve, saying U.S. supplies were ample and prices would soon fall.
Roughly 15 million barrels of crude oil — about 20 per cent of the world's oil — typically are shipped every day through the Strait of Hormuz, according to independent research firm Rystad Energy.
The threat of Iranian missile and drone attacks has all but stopped tankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran from travelling through the strait, which is bordered in the north by Iran.
