Oil prices rise as conflict escalates between Iran and Israel
MST Financial Senior Energy Analyst Saul Kavonic discusses the rise in oil prices due to the escalating conflict between Iran and Israel.
'The price rise we've seen since Friday is not based on any actual supply disruption because that hasn't happened at least yet, so this is just a risk premium due to the potential scope of a supply disruption,' Mr Kavonic said.
'The most severe scenario, of course, would be if Iran looked to shut down the Strait of Hormuz, where 20 per cent of the world's oil and 20 per cent of the world's LNG pass through.
'That could cause an energy crisis such that we've not actually seen before.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Sky News AU
21 minutes ago
- Sky News AU
Albanese should find a seat at the everyday Aussie kitchen table where the bills are piling up, instead of looking for a place next to Trump
While Australians again struggled to afford fuel and basic groceries this week, the Prime Minister had in his sights another overseas trip to enhance foreign optics instead of fixing problems at home. Mr Albanese has now ditched a last-minute appearance at next week's NATO summit in The Hague, some 16,000 kms away, in the hope it would produce a face-to-face with US President Donald Trump. The decision to instead send his deputy Richard Marles follows the PM's scheduled G7 encounter with Mr Trump in Canada which was scuttled by President's early exit to address the Iran-Israel conflict. What we are now also witnessing in the aftermath of that snub is a diplomatic dance which underscores just how far Mr Albanese is willing to go to secure a seat at the grown ups' table. At home, Australians are hurting and the cost of living remains the number one issue in this country. It has been for three years, probably more. The PM needs to stop eyeing a meeting with Trump overseas and start restoring confidence in his government's ability to manage both domestic and foreign affairs in a strategic and strong fashion. Sure, the US President's brush-off was a diplomatic embarrassment especially as it lacked a private heads-up to Mr Albanese before publicly pulling the plug on their meeting. But it's time to move on. The real questions are these: when was the last time this government delivered a serious and immediate policy to cut household energy bills? When was the last time this government offered tangible relief to small businesses buckling under the weight of supply chain blowouts and relentless interest rate pressure? This week it was announced that a productivity roundtable in Canberra was in the works to 'shape our government's growth and productivity agenda'. But already this is being picked apart as a consensus talkfest if cutting net immigration and net zero targets are not seriously considered. I don't think we are dealing with an abstract economic trend here because for nine million Australians it has nearly reached the point of financial collapse. New research from comparison site Finder paints a grim picture. Nearly half the country is the cost of a cracked windscreen or dentist's bill away from the edge. The average savings for this group? A paltry $215 which in NSW I would argue doesn't even cover a week's groceries. I saw a 1kg bag of ordinary coffee beans at the supermarket this week for $80. Dishwasher tablets, 82 of them, for $78. There was plenty of room to move in the fruit and vegetable aisle, with the least expensive thing to buy some apple varieties I'd never heard of and likely tasteless and cold-storaged for months. You're trying your luck if you fancy 350g of multi-coloured mini tomatoes for under $6.50, punished for your caviar-style tastes. The frozen food aisle with the cheaper dinners like fish fingers and bulk meat pies was doing brisk business, however. Local Facebook group chat is dominated by members asking for money saving tips including what time of day do local supermarket staff appear in store with a yellow sticker gun to discount products. According to Finder, 43 per cent in the cohort referenced have less than $1,000 in a bank account. More than half live pay transfer to pay transfer and 47 per cent are banking on a tax refund to plug holes in the dam. And a $12 coffee? Don't laugh, it's coming to a cafe near you. When inflation is combined with supermarket gouging, international trade instability and policy gridlock, prices only go in one direction. In cafes, once the beating heart of urban Australia, small business owners continue to be crushed. Wages, energy, rent, beans, you name it. Roasters say stress on the international coffee bean market means the only solution is to jack up prices. This isn't indulgence anymore. It's economics at gunpoint. Meanwhile, those brewing at home are finding supermarket shelves are no longer a refuge. Instant coffee is probably booming but that's less about convenience and more about budget. And then there's fuel. If you're still planning on driving to work, brace yourself. Petrol is tipped to hit $2.20 per litre with Middle East tensions sending the global oil markets into panic mode and we're all meant to just accept it like it's the weather. Australia may not import oil from Iran but that's no comfort at the bowser. Our prices are still shackled to global markets which drives up costs at the pump while hammering fuel-reliant industries nationwide. Australia used to have several oil refineries and now we have just two - Queensland's Lytton Refinery operated by Ampol and Victoria's Geelong Refinery, operated by Viva Energy. We can blame globalisation and "market efficiency" for that and we now import most of our refined fuel. With petrol spiking, inflation stays high too so consider that in terms of the Reserve Bank delaying any long-awaited interest rate cuts. And let's not forget the cherry on top: fuel excise and GST. What's the domestic agenda? Because from where most Australians stand at the petrol pump, in the supermarket aisle or checking their empty bank apps, it doesn't feel like there is one. We don't need a seat at NATO next week. Mr Albanese has had months to build a relationship with the Trump administration and should now plan to see him in Washington. We need a seat at the kitchen table where bills are piling up and no one from Canberra seems to be listening. Louise Roberts is a journalist and editor who has worked as a TV and radio commentator in Australia, the UK and the US. Louise is a winner of the Peter Ruehl Award for Outstanding Columnist in the NRMA Kennedy Awards for Excellence in Journalism and has been shortlisted in other awards for her opinion work
The Age
a day ago
- The Age
Australia an energy target as Iran-Israeli war triggers global turmoil
'In the worst-case scenario in which the Strait of Hormuz is closed, it will affect both global LNG and oil markets by up to 20 per cent of their respective annual consumption,' Citi energy analysts said this week. 'Global LNG markets will be more vulnerable than oil to further escalation of Middle East tensions.' These Middle East petro states may be underpinned by oil sales, but LNG gives them much-needed diversification. And LNG assets far away from the region give them pricing and supply upside from any energy price spikes triggered by these conflicts and any related supply shocks. Santos could not be more tempting from a strategic point of view. It would give XRG a business far from the drama of the Middle East thanks to its assets in Australia, Papua New Guinea and Alaska and close to Santos' coveted Asian customers, which have a fast-growing appetite for LNG. And what would the Santos suitors make of Australia's comical industry, where operators get a lot of their gas royalty-free from Australians and then make a fortune selling it back to them as global prices surge? Santos is not the only local energy giant making a splash among the oil giants. Loading Woodside Petroleum boss Meg O'Neill was part of the Trump entourage on his recent trip through the Middle East. She signed up Saudi Aramco, the world's largest oil and gas producer, as a partner for Woodside's US projects. She was almost the only female in a group photo with Trump and Saudi Crown Prince Mohammed bin Salman. She was quoted in the official White House press release. 'Woodside and Aramco will explore global opportunities, including Aramco's potential acquisition of an equity interest in an LNG offtake from the Louisiana LNG project as well as exploring opportunities for a potential collaboration in lower-carbon ammonia,' she said. 'Lower-carbon' is the other major reason why these petro states are now pouring more money into LNG developments than oil. Loading Even the petro states realise LNG will have a longer shelf life than oil as the alleged 'transition fuel' to a green energy future. China's total crude oil consumption dropped last year and developing nations are expected to follow as they adopt the flood of cheap EVs China is churning out. But the future of the Santos bid is as uncertain as the outcome of the Israel/Iran conflict. The XRG consortium is conducting due diligence, and as both sides are cautioning, there is no certainty that a formal offer will emerge. Loading More importantly, there are many regulatory hurdles, including government approval if a concrete offer does emerge for what is a critical piece of Australian infrastructure. The issue of domestic gas reservation, to prevent taxpayers and local businesses from getting screwed by companies supplying Australia its own gas, will be an interesting part of any takeover negotiations, especially since Santos already supplies gas domestically. The fact that Santos is trading at something close to a $5 billion discount to the $30 billion cash being offered for its shares tells you plenty about how cautious the market is about the potential success of this deal.
Sydney Morning Herald
a day ago
- Sydney Morning Herald
Australia an energy target as Iran-Israeli war triggers global turmoil
It does not appear to be a coincidence that hours after Israel started raining bombs down on Iran, one of the embattled country's neighbours, Abu Dhabi, pounced with an audacious offer that Australian energy giant Santos could not refuse. After making two offers over a week in March, the suitors are now putting $36 billion cash on the table, including debt, for one of our gas sector giants. If successful, it would be the largest ever cash offer in Australia's corporate history. Abu Dhabi's state-owned oil company, the Abu Dhabi National Oil Company, the world's 12th largest oil company by production, is the major player behind the bid via its $US80 billion ($123 billion) overseas investment arm XRG. This business was launched last year with a mission to meet rising global demand for lower-carbon energy and to become one of the five biggest integrated global gas and LNG businesses. So why does a state, a part of the UAE, which is awash in oil, make such a huge bet on becoming a global LNG business? Loading There are two core reasons: geography and the green energy transition. The Israel-Iran conflict, and the threat of escalation if US President Donald Trump drags the US into it, will send global oil prices soaring for one key reason: any existential threat to Iran's leadership could lead to an effective blockade of the Strait of Hormuz. It is a crucial choke point in the global energy supply chain, and not just for oil. Middle East LNG exports are even more reliant on the strait than is oil, and there are fewer alternatives to shipping LNG through the strait.
