The price of oil surged more than 3% and boosted Canada’s main stock index Wednesday — one day after America withdrew from the Iran nuclear accord.
“Oil is pretty much the big story of the day,” said Michael Currie, vice-president and advisor at TD Wealth.
The June crude contract rose US$2.08 or 3.01% to US$71.14 per barrel.
The “pretty big day by any measure” comes after U.S. President Donald Trump announced Tuesday that America would no longer be a party to the Joint Comprehensive Plan of Action. The 2015 agreement between the U.S., Iran and five other countries (plus the European union) limits Iran’s nuclear weapon-building capabilities and lifts most American and international sanctions against the country. Trump also said he will institute new sanctions against Iran.
Analysts anticipate oil producers unaffected by the deal will have less competition and be able to raise prices, Currie said, adding estimates say Iran’s production may decrease by between 200,000 and 1,000,000 barrels per day.
The commodity’s rise gave strength to energy companies, with the energy sector being among the top three performers of the S&P/TSX composite index on Wednesday. Shares in the sector gained on average 1.24% of their worth, only outdone by base metals and health care companies.
The index rose 68.10 points to 15,910.81.
In New York, the Dow Jones industrial average gained 182.33 points to 24,542.54. The S&P 500 index advanced 25.87 points to 2,697.79 and the Nasdaq composite index moved up 73.01 points to 7,339.91.
The Canadian dollar was trading at US77.78¢, up 0.64 of a U.S. cent.
Elsewhere in commodities, June natural gas contract gained about a penny to roughly US$2.74 per mmBTU. The June gold contract shed US70¢ to US$1,313.00 an ounce and the July copper contract was relatively unchanged at about US$3.06 a pound.