Brent tops US$112 as oil rally lifts Canadian producers and pressures retiree costs
Oil is roaring back, with Brent flirting with US$120 and some Middle East crudes already above US$150 – and that combination of higher prices, inflation risk and Canadian supply strength lands directly in long‑term investors’ laps.
War, Hormuz and the biggest supply shock in years
Global crude benchmarks have surged after the US-Israeli war on Iran escalated into what Reuters called “the largest-ever disruption to global energy supplies,” driven by attacks on oil and gas facilities across the Middle East and severe restrictions on shipping through the Strait of Hormuz.
Reuters reported that Brent futures for May settled at US$112.19 a barrel, the highest since July 2022, while US West Texas Intermediate (WTI) for April settled at US$98.32.
Iraq declared force majeure on all oilfields developed by foreign oil firms and said it could not ship crude through Hormuz, while drones struck Kuwait’s Mina Al‑Ahmadi and Mina Abdullah refineries, forcing a partial shutdown at Mina Al‑Ahmadi.
Al Jazeera said Iran declared the Strait of Hormuz closed early in the conflict and threatened to strike ships attempting to pass, causing traffic to “all but” stop.
Reuters reported that flows of crude and condensate have dropped by about 12m barrels per day, or around 12 percent of daily world demand, due to output cuts and export halts by Gulf producers.
Analysts quoted by Reuters said the oil market is now building in expectations of longer supply shut‑ins and at least several weeks before the strait reopens.
Physical barrels and regional benchmarks blow past futures
While Brent and WTI have climbed sharply, prices in physical markets have jumped even more.
Reuters reported that Middle East Dubai crude hit a record US$166.80 a barrel and that European and African cargoes have risen to about US$120, with even Russian barrels rebounding above US$100.
Al Jazeera said benchmark Middle Eastern crudes such as Oman and Dubai have already crossed the US$150 mark, putting US$200 “within sight” for those grades.
CNBC reported that Dubai crude surpassed US$166 a barrel and noted that the local Gulf benchmarks are now seen as a potential guide to where US and European prices could head if Hormuz remains closed.
Refined products have also surged.
Reuters said jet fuel in northwest Europe hit a record around US$220 a barrel and European diesel breached US$200 a barrel for the first time since 2022.
Analysts quoted by Reuters argued that as long as flows through Hormuz remain restricted, the “path of least resistance” for crude prices is higher.
Canada’s windfall – and the pipeline ceiling
The Financial Times reported that Canadian oil producers stand to gain up to $90bn if crude prices stay near current levels since the Iran war began.
According to Enverus modelling cited by the Financial Times, Canadian companies will generate an extra $25bn–$30bn in revenue for every US$10 rise in oil prices this year.
WTI has risen to just over US$98 from US$67.02 on February 27, delivering “a huge boost” to an industry seeking to expand exports to Asian markets.
Canada is already the world’s fourth‑largest oil producer, and the Financial Times reported that Prime Minister Mark Carney has announced plans to boost fossil fuel exports to shield the economy from a trade war initiated by US President Donald Trump.
Oil production hit a record 5.19m barrels per day in the first six months of 2025, up from 5.13m b/d in 2024, according to the Canada Energy Regulator figures quoted by the Financial Times.
Shares of Canadian Natural Resources, Suncor Energy, Imperial Oil, and Cenovus have each risen by 40 percent or more since the start of 2026.
At the same time, the Financial Times noted that more than 90 percent of Canada’s crude still goes to the US, where it sells at a discount because of pipeline constraints and the heavier, higher‑sulphur quality of much Canadian oil.
The paper reported that completion of the Trans Mountain Expansion in May 2024 allowed crude to reach the West Coast, with sales to China more than quadrupling to 88.7m barrels last year.
François Poirier, chief executive of TC Energy, told the Financial Times that the closure of Hormuz is forcing customers to seek alternative supplies from North America and argued that new pipelines should be built so Canadian producers can respond to Middle East crises and monetise resources.
He called for “fundamental reform of existing regulations” to simplify and speed project approvals.
The Financial Times reported that research by ATB Economics and Studio.Energy estimated that expanding Canada’s oil export infrastructure by 1.5m b/d – an increase of nearly one‑third – could add an average $31.4bn to real GDP each year over the next decade, a 1.1 percent lift to Canada’s real GDP.
Inflation, growth, and how long this can run
Higher oil prices are already feeding through to inflation and growth expectations.
Al Jazeera said the International Monetary Fund estimates that every 10 percent rise in oil prices, sustained over a year, corresponds to a 0.4 percent increase in global inflation and a 0.15 percent reduction in economic growth.
The Financial Times reported that RBC analysis suggests if oil remains above US$100 a barrel, headline inflation could rise by three‑quarters of a percentage point, peaking at about 3 percent in Canada and 3.5 percent in the US this year.
Al Jazeera noted that Brent has not dropped below US$100 since March 13 and that some analysts see US$150 oil as likely if Hormuz stays closed, with US$200 “perfectly possible” in certain scenarios, while others describe US$200 Brent as “pretty outlandish.”
According to CNBC, Citi now expects Brent and WTI to climb to US$120 over the next one to three months and to US$150 in a bull‑case scenario if disruptions intensify, while its base case assumes de‑escalation within four to six weeks, allowing Brent to fall back to about US$70–US$80 by year‑end.
Al Jazeera reported that analysts see future prices hinging on two factors: how long Hormuz stays disrupted and how fast “demand destruction” emerges as buyers cut back at very high price levels.
They said that mix will determine both the length of the revenue windfall for producers and the size of the inflation shock for economies.
