TSX Dips as U.S.-Iran Peace Talks Collapse, Fueling Oil Supply Fears

The S&P/TSX Composite Index closed down 0.25% at 33,818.19 on Monday, as investors reacted to the sudden collapse of peace talks between the United States and Iran. The cancellation of the diplomatic mission to Pakistan has left the Strait of Hormuz shut, intensifying concerns over global oil shipments and maritime security. The conflict, which began on February 28, saw a brief window of hope when both nations agreed to meet. However, President Donald Trump halted the travel of Special Envoy Steve Witkoff and Jared Kushner, stating that negotiations could be handled via telephone. Iran has since proposed reopening the Strait of Hormuz in exchange for the removal of a U.S. naval blockade on Iranian ports, though the U.S. has yet to officially respond. Despite the overall index decline, the energy sector rose 2.32%, with Arc Resources Ltd jumping 21.15% and Kelt Exploration Ltd gaining 13.48%. Conversely, the materials sector acted as a drag on the benchmark. Goldman Sachs has warned that the prolonged blockade could eventually lead to "demand destruction" for crude oil as prices soar. In Canada, markets are also weighing a jump in March headline inflation to 2.40%, up from 1.80% in February. The Bank of Canada is widely expected to maintain its benchmark interest rate at 2.25% during Wednesday's meeting. Additionally, uncertainty persists regarding the timeline for Canada's participation in the review of the North American trade agreement, adding to investor anxiety.