Varcoe: Amid Middle East conflict, oil prices gyrate wildly and Canadian producers assess spending

Calgary Herald

3 hours ago

The spiralling conflict in the Middle East triggered a sudden whipsaw in global oil prices to start the week, dropping by more than US$5 a barrel on Monday despite concerns about potential supply interruptions in the critical Strait of Hormuz.
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And the Canadian oilpatch is keeping a close eye on the clash in the region, and its impact on energy markets.
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After the U.S. bombed underground nuclear installations in Iran over the weekend, prices for West Texas Intermediate (WTI) crude shot up briefly Sunday evening above US$75 a barrel.
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Yet, U.S. benchmark oil prices tumbled $5.33 to close at US$68.51 a barrel on Monday as oil markets tried to assess the risk to global supplies, even as Iran reportedly fired missiles at a U.S. base in Qatar.
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Iran said the missile attack on a base matched the number of bombs fired by the U.S. at its nuclear sites, indicating a 'likely desire to de-escalate,' the Associated Press reported, while U.S. President Donald Trump later posted on social media that Iran and Israel had agreed to a ceasefire.
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'Once again, the major powers are stepping back from causing a major oil disruption,' Bob McNally, president of Rapidan Energy Group, said in an interview from Houston on Monday.
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A report by consultancy Rystad Energy noted the situation remains fluid and energy markets were 'pricing the potential de-escalation.'
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'We are watching for certainly any retaliatory acts that would damage oil production, oil refining facilities . . . We're also looking at the Strait of Hormuz and whether Iran is going to try to block the strait using military power.'
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Oil prices surged over the past two weeks after Israel fired missiles at nuclear facilities in Iran — it's one of the largest oil producers in OPEC.
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While Iran exports about 1.5 million barrels per day (bpd) of oil, analysts have been focused on any potential impact on the Strait of Hormuz, the gateway to and from the Persian Gulf.
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The strait, which touches Iran to the north and Oman to the south, saw an average of 20 million barrels per day — or one-fifth of global petroleum liquids consumption — move through it last year, according to the U.S. Energy Information Administration.