The week of May 3 through 9 produced one of the most volatile stretches in oil markets since the Iran war began in late February. WTI futures swung between $107.46 and $88.66 in a single week before stabilizing near $95 per barrel. Brent settled near $101. The volatility reflected a market trying to price a conflict with no clean resolution timeline: a ceasefire that both parties contest, a Strait of Hormuz that remains largely closed, and diplomatic negotiations through Pakistani intermediaries that have produced no definitive agreement as of May 11.
The underlying supply story has not changed. The IEA estimates the conflict is removing approximately 14 million barrels per day from global supply. QatarEnergy declared force majeure on LNG contracts after Iran struck Qatar's Ras Laffan facility in March. The UAE and Kuwait have been intercepting hostile drones. The physical market has been operating in crisis mode for ten weeks, and the ceasefire has not materially altered the supply picture.
The Chain From Hormuz to Canadian Portfolios
The mechanism connecting the Strait of Hormuz to a Canadian advisor's client portfolio runs through several distinct channels that cut in different directions. The most direct and positive channel for Canada is energy revenue. Canada is one of the few G7 nations that is a net oil exporter. Canadian oil sands production does not transit Hormuz and is priced relative to WTI, which has risen roughly 56% over the past year. Canadian energy companies have benefited substantially, with Cardinal Energy, Enbridge, and Wheaton Precious Metals all reporting strong Q1 results in the most recent earnings period.
The negative channels are less visible but more pervasive. Jet fuel spiked approximately 95% since the war began, contributing to travel cost inflation. Fertiliser prices have risen because natural gas, used to produce ammonia, has become scarcer through the LNG disruption. The IEA warned in its April Oil Market Report that demand destruction has begun in Asia, projecting a Q2 2026 contraction of roughly 1.5 million barrels per day. That demand destruction threatens the global growth outlook and, through that channel, commodity prices broadly.
Ceasefire Credibility and the Pricing Problem
The repeated pattern in oil markets since late February has been a cycle of diplomatic hope followed by military escalation followed by a repricing that lands somewhere between the prior peak and trough. Brent surged to $119, retreated on ceasefire news toward $88 briefly, and has since settled near $101 as markets balance diplomatic progress against continued physical disruptions. The week of May 3-9 compressed that entire cycle into five trading days.
From a portfolio construction standpoint, this pattern creates a specific risk for Canadian investors with energy overweights. A rapid, credible resolution that restores Hormuz traffic would likely send Brent toward the $75-80 range the Bank of Canada assumed in its baseline forecast: a 20-25% decline from current levels. That scenario arrives alongside the CUSMA review deadline on July 1, compressing two of the TSX's major risk factors into a single summer window.
JPMorgan's economists told clients in a May 8 note that supply buffers are eroding and that even after shipping access is restored, roughly one billion barrels of lost production must be replenished before the market normalizes. For Canadian portfolios with energy exposure, that is the base case to plan around: an oil floor meaningfully above pre-war levels even in the resolution scenario, for a period that extends beyond the diplomatic headline.