What the Israel-Iran conflict means for the oil market

ANZ Senior Commodity Strategist Daniel Hynes breaks down three potential scenarios concerning the Israel-Iran conflict's impact on the oil market.
'Certainly, tensions have ratcheted up over the past week,' Mr Hynes told Sky News Business Reporter Edward Boyd.
'We've sort of broken it down into three main scenarios: one being we get an extended conflict where Israel and Iran exchange missiles, but we don't see any sort of major supply disruptions.
'Things could escalate, and that would certainly bring greater risk to the oil market – we'd potentially see a huge amount of supply at risk, particularly through the Strait of Hormuz.
'The final scenario being that the conflict essentially subsides.'

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ABC News

37 minutes ago

• ABC News

Financial markets weigh up conflict

Samantha Donovan: Investment analysts say the Israel-Iran conflict is seeing an uneasy calm on global financial markets. AMP's Shane Oliver helps manage billions of dollars for the superannuation firm AMP. He's told our business correspondent David Taylor that calm could disappear if Iran decides to close the Strait of Hormuz, a critical sea passage for the world's oil supply. Shane Oliver: The financial markets seem fairly relaxed about things. There was the initial knee-jerk reaction a week or so ago when the news struck that Israel had hit targets in Iran and that Iran was retaliating. So, you saw this initial knee-jerk reaction. Oil prices sort of rose from about $68 a barrel to $74 or thereabouts. Share markets came down a bit. Ever since then, they've sort of been treading water waiting to see what happens. Of course, at the back of everyone's mind, there's always this fear that we're going to see a rerun of what happened in 1973 or 1979. But most of the time, that doesn't happen. This time around, though, there's probably a bit more nervousness simply because Iran has potentially getting closer to nuclear capability, nuclear weapons capability, and of course, Israel is determined to wipe that out. So that's why the situation is a lot more tense this time around. But I think investors are still thinking, well, maybe it'll turn out OK and be a non-event. David Taylor: When Donald Trump says via the White House press secretary that he's simply going to make it as he wants an extension for two weeks, he's going to make a decision within two weeks or at the end of two weeks, you're the ANP's strategist for a lot of money, a lot of investments. When you hear something like that, what's your thought? Is your thought that he's stalling or is your thought that markets simply just have to wait day by day as to what's going to happen next? Shane Oliver: Yeah, I guess his eyes done a very good job in terms of Iran, got the situation to a point where they can almost wipe out Iran's nuclear capability. And so maybe he should take that point. On the other hand, he worries that it could just lead to a worse situation, retaliation by Iran against shipping through the Strait of Hormuz, through which 20 per cent of global oil supplies flow on a daily basis, and that it might bog the US down in a longer-term conflict. So the fact that he's thinking about it, I think, is a good sign. By the same token, it may just be giving more time for Iran to come to the party and surrender unconditionally. So it could be about that. Or alternatively, it could just be giving more time for the Israelis and the US to prepare the situation to go into trying to take these strikes. But the fact that it's not happening rashly, I think, is a good thing that he is thinking about it. So that gives me a little bit of comfort. And that's, I think, why share markets have ended the week, at least in the Australian time zone, reasonably in a reasonably calm mode. You haven't seen this sort of freefall that might have occurred if we'd gotten up in the morning and found that the US had struck Iran. David Taylor: But I guess that's a possibility still. Shane Oliver: It's still out there. It's still a possibility. I mean, the best outcome for everyone is Iran comes to the table and says, yeah, we're going to negotiate. We'll give you clear access to inspect nuclear facilities to make sure that we're not building nuclear weapons. That's probably the best outcome for everyone. The situation in the Middle East settles down. Oil prices fall back to where they were a few weeks back. And we move on to the next thing, back to focusing on tariffs. But it looks like we could be in for a period of uncertainty regarding this, not only whether the US will act, but when they do, how Iran then responds. And this could take some time before it's finally resolved. And then if Iran does respond and disrupt shipping, they don't have to block the whole of the Strait of Hormuz. They just have to provide enough of a threat to stop shipping going through there. Then how long it takes for the Americans to clear the situation again and remove the threat. And all of that could take quite a while. Samantha Donovan: That's AMP's Head of Investment Strategy, Shane Oliver. He was speaking with our business correspondent, David Taylor.

Perth Now

2 hours ago

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Wall St edges up,Trump's Mideast decision in focus

Wall Street's main indexes have nudged higher, tracking strength in global stocks after President Donald Trump held off from making an immediate decision on US involvement in the Israel-Iran war. Trump will take a call in the next two weeks, the White House said on Thursday, as hostilities between the two Middle Eastern countries approached their second week. Markets have been on edge as Trump has kept the world guessing on his plans - veering from proposing a swift diplomatic solution to suggesting the US might join the fight as Israel aims to suppress Tehran's ability to build nuclear weapons. A senior Iranian official told Reuters Tehran was ready to discuss limitations on its uranium enrichment, but zero enrichment will be rejected "especially now under Israel's strikes". Foreign Minister Abbas Araqchi has arrived in Geneva to meet European counterparts, who are hoping to establish a path back to diplomacy. "Any news flow that's going to lean in the direction of de-escalation is going to be a market positive and we're seeing that to a certain extent here," said Art Hogan, chief market strategist at B. Riley Wealth. Concerns about price pressures in the US were also in focus after Federal Reserve policymakers on Wednesday warned inflation could pick up pace over the summer as the economic effects of Trump's steep import tariffs kick in. They kept interest rates unchanged. On Friday, Fed governor Chris Waller said the central bank should consider cutting interest rates at its next meeting given recent tame inflation data and because any price shock from tariffs will be short-lived. In early trading on Friday, the Dow Jones Industrial Average rose 123.38 points, or 0.29 per cent, to 42,295.04, the S&P 500 gained 13.34 points, or 0.22 per cent, to 5,994.21 and the Nasdaq Composite gained 38.74 points, or 0.20 per cent, to 19,585.01. Nine of the 11 major S&P 500 sub-sectors rose. Real estate led sector gains with a 0.7 per cent rise. On the flip side, healthcare stocks lost 0.5 per cent. All three main indexes are set for weekly gains. Investors are also bracing for any potential spike in volatility from Friday's "triple witching" - the simultaneous expiration of single stock options, stock index futures, and stock index options contracts that happens once a quarter. Among megacap stocks, Apple advanced 1.3 per cent. Kroger rose 6.4 per cent after the grocery chain increased its annual identical sales forecast. Mondelez International gained 2.4 per cent after brokerage Wells Fargo upgraded the Cadbury parent to "overweight" from "equal-weight". Accenture fell 7.2 per cent after the IT services provider said new bookings decreased in the third quarter. Wall Street's strong gains last month, primarily driven by a softening in Trump's trade stance and strength in corporate earnings, had pushed the benchmark S&P 500 index close to its record peaks before the ongoing conflict in the Middle East made investors risk-averse. The S&P 500 index now remains 2.4 per cent below its record level, and the tech-heavy Nasdaq is 2.8 per cent lower. Advancing issues outnumbered decliners by a 2.16-to-1 ratio on the NYSE and by a 1.45-to-1 ratio on the Nasdaq. The S&P 500 posted 12 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 55 new highs and 31 new lows.

Sky News AU

5 hours ago

• Sky News AU

Qatar Airways partners with Virgin Australia, directly competes with Qantas

Sky News host Ross Greenwood discusses Qatar Airways' 25 per cent ownership in Virgin Australia, claiming Qantas will now have more international competition after the Australian Government 'knocked back' Qatar Airways in the past. 'Qatar, you know, sort of, is obviously, been this week named as the best airline in the world,' Mr Greenwood told Sky News host Steve Price. 'The key for that is really that they own now 25 per cent of Virgin – Virgin is about to list on the Australian Stock Exchange, or re-list after it had previously gone broke. 'Given the fact that in the past, Qatar has really tried to get more flights into Australia, been knocked back by the Australian Government, and whether this tie-up now really does mean it's going to create more international competition for Qantas.'