The price of oil surged higher early in the session yesterday as tensions in Middle East persist, which has brought traffic in the Strait of Hormuz to an effective halt. However, that increase pared back after the Group of Seven (G7) countries said they would be willing to release strategic reserves to help stabilize the oil market. By the end of the day, oil prices had fallen. North American equity markets, which were volatile early in the day, recovered after US President Donald Trump said the conflict could be ending soon.

• The price of oil surpassed US$100/barrel early yesterday for the first time since 2022 before pulling back. Back then, inflation was ultra-high, forcing many central banks to raise interest rates. Fears of higher inflation and a slowdown in economic growth have gripped investors in recent days.
• The Strait of Hormuz remains effectively closed. Saudi Arabia has joined others, such as Kuwait and the UAE, in reducing oil production.
• G7 countries met virtually yesterday and issued a statement saying they are willing to take measures to help support the global supply of oil, including releasing reserves.
• In an interview later in the day, President Trump signaled that the war on Iran could be coming to an end relatively soon, believing the operation was ahead of schedule.
• Back in Canada, a reading of consumer confidence from Bloomberg Nanos showed Canadian consumer confidence slipped over the week ended March 6, largely in response to concerns over the labour market. Any lingering conflict in the Middle East could weigh on confidence in the weeks to come.

The comments from President Trump excited investors. However, the conflict is not done until it is done. The threat of higher inflation, including here in Canada, has reemerged in response to geopolitical tensions, which have pushed up oil prices. There is growing concern that higher inflation could weigh on demand, which could hinder overall economic activity.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.