Oil prices leaps due to concerns about crude oil markets arising from Middle East conflict
Oil prices are rising and shares fell on Friday over fears that Israel's attack on Iran's nuclear nuclear program could escalate further and damage global crude oil flows and the global economy.
The price of West Texas intermediate barrels (benchmark U.S. crude) jumped nearly 7% on Friday morning to around $72.65.
The barrel of the international standard Brent Intrude also rose by about 7% to $74.30.
The Western Canada option is priced at around $57.34 per barrel.
Iran is one of the world's leading oil producers, although sanctions from Western countries have restricted its sales. If a broader war breaks out, it could slow down Iran’s oil flow to its customers and make crude and gasoline prices higher for everyone in the world.
In addition to oil from Iran, analysts also pointed to the possibility of destruction of a relatively narrow waterway near the Iranian coast, the Hormuz Strait, where most of the world's oil moves on board.
Oil prices rose on Friday, fears that a wider Middle East conflict would destroy traffic in the Hormuz Strait, through which most global oil supply would be passed.
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However, past attacks involving Iran and Israel were initially priced at the peak of oil until later “once it became clear, this situation did not escalate and had no impact on oil supply”
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That's Wall Street waiting to see what happens next.
For now, oil prices have risen, but are still lower than earlier this year.
“This is an economic shock that no one really needs, but it seems to be a shock to the emotions, not the fundamentals of the economy,” said Brian Jacobsen, chief economist at the attachment.
Global stock markets also tilted the news from the Middle East, with the Canadian major stock index TSX at about 25:00 to 26,590 ET.
The Dow Jones industrial average fell by about 400 points to 42,572.79, with the Nasdaq Complex at 100 points to 19,561 respectively.
Exxon Mobil shares rose 1.5%, while Conocophillips rose 1.9%, as the price of crude oil predicts greater profits.
The Canadian dollar is slightly above 73.63 cents.
As investors search for safer places to park cash, the price of gold also climbed about 1.5% to more than $3,400 and approached record highs.
While persistently higher oil prices may lead to higher gasoline prices, it could be a blessing for Alberta's provincial budget, which is expected to deficit of $5.2 billion, as oil prices are expected to be around $68 per barrel on average.
Every dollar increase in oil prices is expected to increase provincial government revenue by about $750 million.
– Documents with Reuters and global news.
