Oil prices were at their highest levels since 2014 in trading Monday, after the Organization of Petroleum Exporting Countries decided not to raise output.
In a meeting Sunday in Algiers, OPEC rejected U.S. President Donald Trump's call to open the taps, with both Saudi Arabia and Russia saying they won't produce significantly more oil.
For consumers, that could mean higher gas prices on the way, but it's good news for Canadian oil producers and initially helped boost stock prices in Toronto today.
On Monday morning, Brent crude, the main European futures contract, rose to $81 US a barrel at midday. WTI crude, the benchmark North American contract, was up 1.7 per cent at $72.29 US a barrel.
Those are the highest prices since December of 2014, just before oil began its slide that took it down to $40 US a barrel in 2015, discouraging investment in the oil patch.
Oil prices have risen 20 per cent this year alone, pushing up the cost of gasoline and home heating oil.
JPMorgan predicts they will go even higher, perhaps above $90 US a barrel, in the near term. U.S. sanctions against Iran, the OPEC member that most wants to boost production, take effect Nov. 1 and could further tighten supply.
Western Canada Select, the Canadian oil contract, is also seeing a price jump, up more than $2 to $37.75, but the spread between WCS and WTI price remains high, at close to $34, because of bottlenecks in getting the oil to market.
The Canadian market, which is heavily dependent on the energy sector, responded to the rising prices with optimism. with the TSX up 24 points. However, by midday results were mixed with the TSX flat at 16,228.
Tariffs weigh on global stocks
Global stocks sank, in part because the U.S. and China officially placed new tariffs on each other's goods, a move that could discourage consumer spending and slow economic growth.
The OPEC governor, Hossein Kazempour Ardebili of Iran, said in comments to Reuters that Saudi Arabia and Russia were unable and unwilling to add more production at short notice.
"They are doing little and late, to get prices higher," he said. "They got prices higher and they are going to get them higher still."
Saudi Arabia successfully negotiated limits on oil production 18 months ago in an effort to get oil prices higher and boost government coffers, which had suffered from an extended period of cheaper oil.
This year the global economy has been expanding strongly, leading to growth in oil consumption and pushing up crude prices.
Trump had demanded OPEC get prices down
On Sept. 20, Trump sent a tweet demanding OPEC produce more to get oil prices down and thus boost the U.S. economy.
"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!" he tweeted.
OPEC agreed to produce more earlier this year at Trump's request. However, Saudi Arabia and Russia now say they have no more capacity.
With files from Reuters, Associated Press