Lexicon Financial Group Weekly Update — September 2, 2026

Sep 4

“One-third of Americans have already been forced to change their lifestyle because their disposable income is gone. A guy can’t go to the corner bar after a rough day at work to have a beer, that’s gone to oil!”

— Terry McAuliffe, an American businessman and politician who served as the 72nd governor of Virginia from 2014 to 2018

ISSUE 243

Looking Around

“Brent oil price above $96 per barrel after Iran fires missiles at Kuwait.”

This is a headline from earlier in the week. We are critical of headlines like this because they don’t tell the whole story. Sure, an attack on a sovereign nation in a volatile part of the world will have an impact on the price of oil and the world. Global modern economies are heavily dependent on oil. And not just for electricity and heating.

For example, over 90 per cent of global transportation relies on petroleum products like gasoline, diesel, and jet fuel. The movement of goods and people is inseparable from oil – the things we buy need to get from the factory to the store and to our homes.

Oil derivatives also serve as feedstock for petrochemicals, plastics, fertilizers, and synthetic materials. The production of chemicals, textiles, and pharmaceuticals all depend on stable oil supplies to function efficiently.

So, it seems obvious that a rise or fall in the price of oil will have economic implications. Fluctuations impact several economic indicators like inflation, trade balances, and national budgets. Higher oil prices increase the production costs for almost everything from food to electronics. (1)

And here’s where the headline we mentioned earlier becomes somewhat misleading. We all know that oil is not just a physical commodity. It’s a financial asset that trades globally. There are major oil benchmarks like Brent and WTI. These terms get thrown around like everybody knows what they mean. But the prices of these two are different because they specifically measure two different types of oil. Not all oil is created equally.

“WTI” refers to “West Texas Intermediate” and describes the type of oil typically found in the United States (more specifically, in Texas) and is the benchmark for the U.S. oil market. WTI is a high-quality oil that is light and “sweet,” which means that it has relatively low sulphur content. It is, therefore, easier and less expensive to refine into gasoline and other fuels. For historical reasons, the prices are based on delivery in Cushing, Oklahoma.

Brent crude is the world’s most widely used benchmark with more than 70 per cent of globally traded crude priced against it. It reflects the price of oil produced in the North Sea and serves as the benchmark for European, African, and Middle Eastern markets. Although it is also a lighter oil, it has a higher sulphur content. However, because Brent crude is produced near the sea, its transportation costs are significantly lower than WTI that is produced in landlocked areas, which increases transportation costs. (2)

Closer to home, the Alberta oil sands produce a heavier oil with a much higher sulphur content. In fact, it is so thick that it needs to be diluted so it flows through pipelines. It is neither WTI nor Brent crude.

The much-talked-about oil from Venezuela? It’s even heavier than Alberta oil. These oils trade at a discount to both WTI and Brent because they require more equipment to refine it into useable fuel.

That’s why a headline about Brent crude does not tell the whole oil story. Brent remains the world's most important oil benchmark, but it isn’t the only one. Understanding which oil is being discussed, and why it is priced the way it is, provides a much clearer picture of what is actually happening in global energy markets.

The point is investors monitor oil price trends to assess risks and returns in sectors like energy, transportation, and manufacturing. Sharp price movements can cause stock market volatility and influence central bank policies. It doesn’t matter if it’s measured in WTI, Brent or other benchmarks. To some extent, financial markets have transformed oil into a global economic barometer, influencing decisions far beyond the energy sector. Oil is also a central driver of international politics and diplomacy, as control over oil resources often translates into economic power and political leverage.

It is a development tool with both economic growth as well as social ramifications. This is why the continued closure of the Strait of Hormuz is a global concern, and it is why we continue to examine the situation and its global and financial impacts closely. It is also why we monitor developments in renewable energy, because a day may come when oil is no longer the king of energy.

Read and Watch

Want deeper insight into topics in your Weekly Update? Then, read and/or right click: ‍

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How Canada could hit back to hurt the US economy - and Trump

European stocks often crash in August: Is this time different?

BOJ chief signals chance of September rate hike, debate on price risks

Is China's economy in trouble?

Looking Back

Major stock markets in North America ended last week mixed.

Canada’s main stock index, the S&P/TSX ‌Composite Index (TSX), slid almost 300 points last Friday, despite Canada’s real gross domestic product (GDP) rising 3.3 per cent in the second quarter on an annualized basis and all six major Canadian banks reporting stronger-than-expected quarterly earnings. For the week, the TSX was down slightly. However, the TSX has remained resilient so far this year and is up 15 per cent year-to-date. (3)

Major stock indexes in the United States (U.S.) finished last week mixed. The S&P 500 Index and Nasdaq Composite Index recorded gains amid generally light trading volumes. Strong results from tech giant NVIDIA and declining oil prices supported investor sentiment, while market participants digested Federal Reserve (Fed) Chair Kevin Warsh’s much-anticipated speech at the annual monetary policy conference at Jackson Hole, Wyoming. Warsh struck a hawkish tone at the conference last Friday and stated that while the economy remains resilient and financial conditions do not appear restrictive, underlying inflation has not improved enough. Warsh reaffirmed the Fed’s two per cent personal consumption expenditures (PCE) inflation target and indicated that raising interest rates remains possible if inflation does not move toward its target.

The headline PCE price index rose 0.2 per cent in July and 3.7 per cent from a year earlier, with both readings somewhat firmer than economists had anticipated. However, the core PCE index—which excludes food and energy—rose 0.2 per cent for the month and 3.3 per cent year over year, matching expectations and limiting the market reaction to the stronger headline figures. Consumer surveys, however, continued to highlight inflation concerns. The University of Michigan’s Consumer Sentiment Index fell to 51.7 in August from 55.2 in July, as consumers grew more worried about inflation and the economic outlook.

The pan-European STOXX Europe 600 Index ended the week broadly unchanged, up 0.15 per cent in local currency terms. European equities were mixed as investors weighed mixed economic data and developments in the Middle East. Technology stocks were supported by strong AI-related earnings. Other major European stock indexes ended last week mixed.

Japan’s stock markets rose last week and recovered some of the previous week’s losses as a pullback in oil prices helped improve investor sentiment. Technology and semiconductor stocks were volatile around NVIDIA’s earnings release, although the U.S. semiconductor and artificial intelligence (AI) computing company’s stronger-than-expected results and upbeat outlook reinforced confidence in continued global AI-related demand.

Expectations for further Bank of Japan (BoJ) policy tightening remain high but were already largely reflected in market pricing. BoJ Deputy Governor Ryozo Himino stressed the need to adjust monetary policy in a timely manner and highlighted upside inflation risks, which reinforced expectations for further tightening without explicitly signaling a September rate hike.

China’s stock markets ended last week mixed. Mainland markets were more resilient than Hong Kong as semiconductor and AI-related shares rallied strongly midweek. An early sell-off following Alibaba’s large equity placement was partly offset later in the week, as strong results and an upbeat outlook from NVIDIA supported sentiment toward AI hardware and semiconductor companies.

China’s industrial profit growth slowed for a third consecutive month in July, rising 11.2 per cent year over year compared with 15.1 per cent in June. Performance varied significantly across industries. Profits in computer, communications, and other electronic-equipment manufacturing more than doubled in the January to July period. This was supported by demand associated with AI and computing infrastructure, while profits declined in industries including automobiles and electrical machinery. This data reinforces signs of an uneven economic recovery, with technology- and export-related industries continuing to perform relatively well, while parts of the economy more exposed to domestic demand remained under pressure. A similar pattern was evident in equity markets during the week, with technology-related areas generally proving more resilient than several consumer-oriented segments. (4)

The Central Role of Oil in the Global Economy, Trading View, October 16, 2025
Brent Cr ude vs. WTI: Key Differences in Oil Benc hmarks, Peter Gratton, Investopedia, March 19, 2026
S&P/TSX composite ends lower, U.S. stock markets also down, Ritika Dubey, Toronto Star, August 28, 2026
Global m arkets weekly update - U.S. consumer sen timent weakens as PCE inflation remains above Fed target, T. Rowe Price, August 2026

The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.

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