By Anonymous - Specimen book of the Cleveland Type Founhdry (https://archive.org/details/cataloguebookofs00clevrich/page/306), Public Domain, https://commons.wikimedia.org/w/index.php?curid=81679425
CALGARY — Oil prices have swung sharply this week as traders react to rapidly shifting tensions between the United States and Iran, pushing benchmark prices from the low $60 range to above $65 a barrel before easing again.
U.S. West Texas Intermediate crude climbed roughly 2 per cent Tuesday after the U.S. military shot down an Iranian drone that approached an American aircraft carrier operating in the region. Reports of Iranian gunboats moving toward a U.S.-flagged tanker in the Strait of Hormuz further unsettled markets, reviving fears of disruptions along one of the world’s most critical oil transit routes.
The gains followed a steep selloff earlier in the week, when oil prices dropped more than 4 per cent after U.S. President Donald Trump said Iran was “seriously talking” with Washington. Analysts say the sharp reversals reflect heavy speculative trading tied to perceptions of whether tensions between Tehran and Washington are escalating or easing, often driven by unpredictable shifts in U.S. foreign policy.
Brent crude settled above $67 a barrel, while West Texas Intermediate closed near $63, after briefly trading higher. Prices pared some gains later in the session following renewed comments from Trump suggesting negotiations with Iran were continuing.
Iran’s geopolitical role looms large in oil markets despite its production levels, given its strategic position near the Strait of Hormuz, where several major OPEC producers ship most of their crude, primarily to Asian markets.
In Western Canada, Western Canadian Select, a heavy crude blend often viewed as a surrogate for sanctioned oil from countries such as Iran and Venezuela, has been trading in the low $50 range. The grade has recently carried a discount of roughly $13 to $15 a barrel compared with West Texas Intermediate.
The price level is closely watched in Alberta, where the provincial government based its 2026 budget on an assumed average price of $56 a barrel for Western Canadian Select. Any sustained move above or below that level could have significant implications for provincial revenues.
Oil markets have also been influenced by broader geopolitical and economic factors, including a new U.S.-India trade agreement that raised hopes for stronger global energy demand and ongoing fighting in Ukraine, which has kept sanctions on Russian oil exports in place.
Analysts say volatility is likely to continue as traders weigh diplomatic signals against military developments in the Middle East and beyond.
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