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CALGARY — Oil prices climbed Tuesday as the United States and Israel continue to wage war with Iran and tanker traffic through the Strait of Hormuz slows dramatically.
Brent crude rose above 84 U.S. dollars a barrel early Tuesday, up more than eight per cent, while West Texas Intermediate traded near 77 dollars, according to Oilprice.com market data. The gains follow a roughly 10 per cent jump a day earlier.
The surge comes as Iran claims it has closed the Strait of Hormuz and warned it would target vessels attempting to pass. During a White House briefing, the U.S. Central Command has denied the waterway is formally closed, but he Joint Maritime Information Center reports tanker traffic through the strait was down 94 per cent.
Roughly one fifth of global oil production moves through the narrow channel between Iran and Oman, according to the US Energy Information Administration. Several economists in both the US and Europe have warned a prolonged disruption could send crude prices toward 100 dollars a barrel or higher.
Liquefied natural gas markets are also reacting. Bloomberg reports European gas prices surged more than 40 per cent Tuesday after Qatar halted production at its Ras Laffan facility, which accounts for about one fifth of global LNG supply.
In Canada, the Montreal Economic Institute says the volatility underscores the country’s position as what it calls a stable and reliable supplier of energy.
“From the conflict in Ukraine to the bombings in Iran, recent crises have firmed up our trading partners’ interest in Canadian energy,” said Gabriel Giguère, a senior policy analyst at the institute, in a statement Monday.
He added that “the reliability and stability of Canada as an energy producer make it a partner of choice for our allies in Europe and Asia.”
The institute points to proposed projects including an LNG export facility in Baie Comeau and a memorandum of understanding between Ottawa and Alberta on a potential new oil pipeline to expand access to Asian markets.
Analysts told Bloomberg that if the Strait of Hormuz remains effectively closed for several weeks, producers in the Middle East may need to shut in output, increasing the risk of further price spikes and broader economic fallout
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