A shift in President Donald Trump’s approach to Iran has sent another wave through global energy markets, pushing oil prices below $90 a barrel and leaving Canadian stock futures struggling to gain momentum. The decline reflects growing optimism that military tensions in the Middle East could ease, potentially reducing pressure on global energy supplies and inflation.
On November 10, Brent crude fell below the psychologically important $90 threshold for the first time since late August. Meanwhile, futures tied to Canada’s benchmark stock index remained nearly unchanged despite a strong rally in Toronto the previous session.
For Canadian investors, the developments present a complicated picture. Lower oil prices could ease costs for households and businesses, but they also threaten earnings in Canada’s energy sector. Persistent inflation and uncertainty surrounding U.S. interest rates are adding to the challenges facing financial markets.
Trump’s Softer Iran Comments Change Market Expectations
President Donald Trump’s latest comments on Iran marked a noticeable shift from the military escalation that had previously unsettled energy markets. Speaking on November 9, Trump indicated that additional U.S. military strikes against Iran were unnecessary for the moment. His remarks followed diplomatic discussions involving Qatar and other Gulf countries seeking to prevent further confrontation. Although Washington maintained its military readiness, the change in language suggested an opportunity for negotiations rather than another immediate round of attacks.
The distinction matters because traders have spent months evaluating the possibility of further disruptions to Middle Eastern oil shipments. A reduction in the immediate threat of military escalation can remove some of the additional cost built into crude prices during periods of uncertainty. However, Trump’s comments did not amount to a peace agreement. The United States maintained its naval blockade in the Strait of Hormuz, and significant disagreements between Washington and Tehran remained unresolved. Markets were therefore responding to a reduced risk of escalation, not confirmation that the conflict had ended.
Oil Falls Below $90 After a Dramatic Price Retreat
Global oil prices extended their decline on November 10 as investors reacted to Trump’s comments and reassessed the outlook for energy supplies. Brent crude, the international benchmark, fell 3.15% to $89.65 per barrel by 13:34 GMT, according to Reuters. U.S. West Texas Intermediate crude dropped 2.68% to $84.52. The declines followed another difficult session for oil producers, with Brent having lost approximately 5.9% during the previous trading day.
The scale of the retreat becomes clearer when compared with prices only days earlier. Brent reached approximately $118 per barrel on October 30, a six-month high driven partly by concerns about escalating attacks against Iran. By November 10, the benchmark had fallen roughly 23% from that peak. It was also the first time Brent had slipped below $90 since August 31. For energy companies, that represents a substantial change in the revenue outlook over a relatively short period. For consumers and businesses, however, the reversal offers the possibility of relief after months of elevated fuel and transportation costs.
Canadian Stock Futures Stall Despite Monday’s Strong Rally
Canadian stock futures showed little movement on Tuesday morning, suggesting that investors were unwilling to extend the previous session’s gains without further economic clarity. December futures tied to the S&P/TSX 60 index rose just 0.04% as of 5:55 a.m. Eastern Time. That muted performance contrasted sharply with Monday’s trading, when the broader S&P/TSX Composite Index surged 657.17 points, or 1.8%, to close at 36,446.26. It was the benchmark’s highest closing level since September 4.
Monday’s rally had been supported by optimism that falling energy prices could ease inflation and improve the outlook for corporate earnings. However, the mood changed after unexpectedly strong U.S. inflation figures arrived Tuesday morning. The TSX opened 0.7% lower at 36,190.03 points, with weaker energy and metals shares contributing to the decline. The reversal illustrated how quickly investors could shift their attention from encouraging geopolitical developments to concerns about interest rates. Lower oil prices were welcome, but they were not enough to resolve the broader economic uncertainty.
Lower Oil Prices Create Winners and Losers Across Canada
Canada’s stock market faces an unusual challenge when crude oil prices decline. As a major energy producer, the country benefits from strong oil revenues, particularly in Alberta and other resource-producing provinces. At the same time, Canadian businesses that purchase fuel can benefit when energy becomes cheaper. The competing forces were visible on November 9, when the TSX energy sector declined approximately 1% even as the broader market rallied. Materials shares climbed 4.5%, industrials gained 2.2%, and financial stocks advanced 1.7%.
The importance of energy to the Canadian economy extends well beyond publicly traded companies. According to the Canada Energy Regulator, the country exported approximately 4.3 million barrels of crude oil per day in 2025, equivalent to roughly 80% of domestic production. About 90% of those exports went to the United States. A sustained decline in global crude prices can therefore affect export earnings, corporate investment and provincial government revenues. Meanwhile, transportation companies, manufacturers and businesses with significant fuel expenses may gain some financial breathing room. The ultimate effect depends on how far prices fall and how long they remain lower.
U.S. Inflation Data Complicates the Market’s Recovery
Investors entered November 10 hoping that declining oil prices would eventually reduce inflationary pressure. However, the latest U.S. consumer price figures delivered a reminder that inflation remains a broader problem. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index increased 0.4% in October, following a 0.6% rise in September. Economists surveyed by Reuters had expected a smaller 0.3% increase. Core inflation, which excludes food and energy, also exceeded expectations, rising 0.3% instead of the anticipated 0.2%.
The details showed why falling crude prices could not immediately solve the inflation problem. Shelter costs increased 0.3% during October, accounting for more than 30% of the overall monthly increase. Food prices rose 0.5%, while the energy index increased another 0.7%, despite slowing considerably from September’s 5.2% jump. The report strengthened expectations that the Federal Reserve would raise interest rates in December. That prospect put pressure on stock markets because higher borrowing costs can discourage investment and weigh on corporate valuations. For Canadian investors, the inflation numbers overshadowed some of the optimism created by Trump’s comments on Iran.
Recovering Oil Supplies Add Pressure Beyond Trump’s Remarks
Trump’s comments provided an immediate reason for oil traders to reconsider their positions, but changes in global supply and demand are also contributing to lower prices. In a November 4 assessment, JPMorgan estimated that the global oil market had returned to a surplus of approximately 1.4 million barrels per day in October, up from 1.1 million in September. The bank attributed the improvement to recovering Middle Eastern exports, additional production elsewhere and weaker consumption after months of elevated fuel prices.
Production figures provide further evidence that supplies are recovering. A Reuters survey found that OPEC output increased by approximately 1.38 million barrels per day in October, reaching 22.87 million barrels daily, with Saudi Arabia, Kuwait and Iraq leading the gains. However, the recovery remains incomplete. The International Energy Agency’s October assessment had warned that global oil inventories were depleted and that market deficits could persist through year-end. The differing assessments highlight an important uncertainty: more crude is becoming available, but shipping disruptions, refinery shortages and changing demand patterns make the market difficult to predict.
The Strait of Hormuz Remains a Major Threat to Stability
Despite the encouraging market reaction to Trump’s comments, the Strait of Hormuz remains central to the outlook for global energy prices. The narrow passage between Iran and the Arabian Peninsula is among the world’s most important shipping routes. According to the International Energy Agency, approximately 20 million barrels of crude oil and petroleum products passed through the strait daily in 2025, representing about one-quarter of global seaborne oil trade. Disruptions can therefore affect countries thousands of kilometres away from the Middle East.
The diplomatic situation remains fragile. Although Trump indicated that new military strikes were not immediately necessary, Washington maintained its naval blockade against Iran. Tehran’s proposed terms for ending the conflict included lifting the blockade, easing certain sanctions and halting military attacks in exchange for restoring maritime access and pursuing further negotiations. American officials rejected those conditions, while attacks involving shipping in the region continued. For international shipping companies and energy buyers, the consequences of renewed escalation remain significant. Any major disruption to tanker movements could quickly reverse some of the recent decline in oil prices, even if the broader supply outlook continues to improve.
The Canadian Dollar Faces Pressure From Falling Energy Prices
Lower crude prices are creating another challenge for Canada through their effect on the currency. The Canadian dollar has historically been sensitive to movements in global energy markets because oil is one of the country’s largest exports. On November 9, the loonie traded around 70.75 U.S. cents, remaining close to an 18-day low despite improving sentiment in global stock markets. By Tuesday morning, it had weakened to approximately 70.69 U.S. cents as crude prices continued falling. The movement reflected concern that reduced energy revenues could weaken Canada’s trade position.
Interest-rate expectations are adding another layer of uncertainty. The Bank of Canada increased its policy rate by 25 basis points to 2.5% on October 28, its first increase since July 2023, citing concerns that high energy costs could produce persistent inflation. However, Canada’s labour market has been showing signs of weakness, with employment declining by 4,700 positions in October and unemployment reaching 6.7%. Meanwhile, stronger U.S. inflation has reinforced expectations of additional Federal Reserve tightening. A weaker Canadian dollar could raise the cost of U.S.-priced imports, potentially offsetting some of the savings businesses might otherwise receive from cheaper energy.
Cheaper Oil May Not Bring Immediate Relief to Canadian Households
For Canadian households, falling oil prices offer the possibility of lower transportation and living expenses after an extended period of financial pressure. However, a significant decline in crude prices does not necessarily produce an equally large reduction at the gas pump. Natural Resources Canada identifies four major components of retail gasoline prices: crude oil costs, refining margins, retail and distribution expenses, and taxes. Each responds differently to changes in global energy markets, meaning the final price paid by motorists depends on more than the international crude benchmark.
Refining costs are particularly important in the current environment. In its October Monetary Policy Report, the Bank of Canada explained that refinery disruptions and restricted supplies had pushed fuel prices higher than crude prices alone would suggest. During September, elevated refining margins added the equivalent of approximately US$40 per barrel to fuel costs. The central bank expected these margins to remain elevated through the end of 2026 before declining gradually. Consequently, Canadian motorists could see some savings if crude prices remain lower, but substantial relief will also depend on refinery operations, wholesale fuel markets and the Canadian dollar.
Diplomacy and Interest Rates Will Determine What Happens Next
The coming weeks will be important for determining whether the decline in oil prices becomes a lasting trend or proves temporary. Investors will be watching negotiations involving Washington, Tehran and regional intermediaries, particularly for developments that could restore more predictable shipping through the Strait of Hormuz. Progress toward an agreement could encourage further declines in crude prices, while renewed military action could quickly restore the risk premium that has recently diminished. Energy production, global demand and refinery availability will also influence the direction of prices.
Monetary policy presents another important test. The Bank of Canada scheduled the release of its October policy deliberations for November 10, offering further insight into concerns about inflation and economic growth. Both the Bank of Canada and the U.S. Federal Reserve have interest-rate decisions scheduled for December 9, while the next U.S. consumer inflation report is due December 10. For Canadian financial markets, the most favourable scenario would combine sustained diplomatic progress with easing inflation and stable economic growth. Until those conditions become clearer, the contrast between weaker oil prices and stalled Canadian stock futures illustrates how uncertain the investment environment remains.
