Canadian, U.S. markets tumble as oil jumps to US$92, Brent tops US$100 on Red Sea attacks

North American stock markets lost ground Thursday after a sharp spike in oil prices following attacks on two Saudi oil tankers in the Red Sea. Brent crude settled at US$100.69 per barrel, while West Texas Intermediate climbed US$5.36 to US$92.19.

Markets face a 'wall of worry'

Carol Schleif, chief market strategist at BMO Private Wealth, said markets were facing a “wall of worry” with stocks under pressure from higher oil prices and nervousness about the AI trade. “It's important to take a step back and realize markets have done really well, year-to-date. The TSX was at new highs recently, the S&P 500's high, you've seen a big transition in leadership,” she said.

The S&P/TSX composite index fell 292.45 points to 35,192.66. Technology stocks led the losses on the Toronto exchange, while energy and utilities were the only sectors to gain.

U.S. President Donald Trump threatened “major military punishment” against Iran-backed Houthi rebels in Yemen if they keep attacking ships, underscoring the importance of the sea route for the global economy.

Oil prices could stay 'more troubled for longer'

Schleif warned that oil prices could “stay more troubled for longer” given the strain on oil reserves and hostilities both in and outside the Strait of Hormuz. Just a few weeks ago, Brent had dropped below US$72 per barrel — roughly where it was before the United States and Israel attacked Iran to begin their war — on hopes that a wind-down would fully reopen the strategic waterway.

Higher oil prices risk worsening inflation, which could push the U.S. Federal Reserve and other central banks to raise interest rates. The Bank of Canada has so far stayed put, saying there are few signs that inflationary pressure from the Iran war is spilling into consumer prices.

Tariff threats add to uncertainty

On the trade front, Prime Minister Mark Carney met with premiers Thursday to prepare a response to fresh tariff threats from the United States. Carney told reporters ahead of the meeting that Canada is “in a stronger position than we were when this trade war started,” thanks to the focus of the people around the table. Trump had signed executive orders on Monday imposing a separate 50 per cent tariff on a range of Canadian goods.

What this means for Nigeria and the naira: Higher oil prices are a double-edged sword for Nigeria. As a major crude exporter, a sustained rally in Brent above US$100 could boost government revenues and ease pressure on the naira. But if the price spike feeds global inflation and forces central banks to raise rates, capital could flow out of emerging markets like Nigeria, weakening the naira further. Nigerian consumers will also feel the pinch through higher import costs for refined fuel and other goods.