Latest news with #Kavonic
Herald Sun
4 days ago
- Business
- Herald Sun
Rate cut still likely despite Iran-Israel crisis
Don't miss out on the headlines from Interest Rates. Followed categories will be added to My News. In mixed news for households, the conflict between Israel and Iran is unlikely to impact future rate cuts unless the worst-case scenario plays out. Economics forecasts say the conflict that started on Friday will add about 0.2 per cent to headline inflation on the back of higher petrol prices. AMP chief economist Shane Oliver told NewsWire the escalation just added more 'uncertainty' but hadn't changed the probability of a July rate cut. 'I don't think the probability of a July cut has changed, we still expect a rate cut in July, August, November and February, taking the official cash rate to 2.85 per cent,' he said. Petrol prices could jump on the back of the Israel-Iran crisis. Picture: NewsWire / John Gass IG market analyst Tony Sycamore said it would all depend on the fallout, with the worst-case scenario being Iran blocks the Strait of Hormuz, which is the primary route for oil producers including Saudi Arabia, Iraq, the UAE, and Kuwait. While pointing out blocking the Strait of Hormuz was a 'last resort' move by Iran, Mr Sycamore said if it did happen, it could impact interest rates. 'This would hamper central banks' ability to cut interest rates to cushion the anticipated growth slowdown from President Trump's tariffs, which adds another variable for the Fed to consider when it meets to discuss interest rates this week,' he said. Mr Oliver agreed, saying any blockage could lead to a dramatic spike in oil prices. 'During the Ukraine conflict we saw oil get to above $US120 a barrel, which would see petrol prices push well above $2 a litre, impacting inflation and more importantly household spending power,' he said. 'The RBA would then have to work out what is more important and I suspect they would look through the inflation spike and be more concerned about the negative impact on economic growth.' Higher oil prices could flow through to the wider economy. Picture: NewsWire/ Gaye Gerard Regardless of whether it sways the Reserve Bank of Australia, the fallout will still hurt Australian consumers. Futures markets for Brent oil have spiked in recent days and are now pricing $US77 a barrel when it was just more than $US65 this time last week. Every $US1 increase in the price of oil roughly adds 1 cent a litre to how much Aussies will pay when they fuel up. MST Financial senior energy analyst Saul Kavonic warned that 'higher oil prices will flow directly through to the pump', adding to the cost-of-living pressures. 'If you start to see prolonged higher prices or even an energy crisis scenario, it will also flow through to our electricity prices via international gas prices,' Mr Kavonic told the ABC. He said this would eventually hit Australian consumers. 'It will flow through to the cost of living because nearly every single thing that you buy and use on a day-to-day basis has energy as a core input cost along its supply chain,' Mr Kavonic said. Originally published as 'More uncertainty': Rate cut on the cards as economic fallout continues
West Australian
4 days ago
- Business
- West Australian
‘More uncertainty': Rate cut on the cards as economic fallout continues
In mixed news for households, the conflict between Israel and Iran is unlikely to impact future rate cuts unless the worst-case scenario plays out. Economics forecasts say the conflict that started on Friday will add about 0.2 per cent to headline inflation on the back of higher petrol prices. AMP chief economist Shane Oliver told NewsWire the escalation just added more 'uncertainty' but hadn't changed the probability of a July rate cut. 'I don't think the probability of a July cut has changed, we still expect a rate cut in July, August, November and February, taking the official cash rate to 2.85 per cent,' he said. IG market analyst Tony Sycamore said it would all depend on the fallout, with the worst-case scenario being Iran blocks the Strait of Hormuz, which is the primary route for oil producers including Saudi Arabia, Iraq, the UAE, and Kuwait. While pointing out blocking the Strait of Hormuz was a 'last resort' move by Iran, Mr Sycamore said if it did happen, it could impact interest rates. 'This would hamper central banks' ability to cut interest rates to cushion the anticipated growth slowdown from President Trump's tariffs, which adds another variable for the Fed to consider when it meets to discuss interest rates this week,' he said. Mr Oliver agreed, saying any blockage could lead to a dramatic spike in oil prices. 'During the Ukraine conflict we saw oil get to above $US120 a barrel, which would see petrol prices push well above $2 a litre, impacting inflation and more importantly household spending power,' he said. 'The RBA would then have to work out what is more important and I suspect they would look through the inflation spike and be more concerned about the negative impact on economic growth.' Regardless of whether it sways the Reserve Bank of Australia, the fallout will still hurt Australian consumers. Futures markets for Brent oil have spiked in recent days and are now pricing $US77 a barrel when it was just more than $US65 this time last week. Every $US1 increase in the price of oil roughly adds 1 cent a litre to how much Aussies will pay when they fuel up. MST Financial senior energy analyst Saul Kavonic warned that 'higher oil prices will flow directly through to the pump', adding to the cost-of-living pressures. 'If you start to see prolonged higher prices or even an energy crisis scenario, it will also flow through to our electricity prices via international gas prices,' Mr Kavonic told the ABC. He said this would eventually hit Australian consumers. 'It will flow through to the cost of living because nearly every single thing that you buy and use on a day-to-day basis has energy as a core input cost along its supply chain,' Mr Kavonic said.
Perth Now
4 days ago
- Business
- Perth Now
What Iran crisis means for rate cut
In mixed news for households, the conflict between Israel and Iran is unlikely to impact future rate cuts unless the worst-case scenario plays out. Economics forecasts say the conflict that started on Friday will add about 0.2 per cent to headline inflation on the back of higher petrol prices. AMP chief economist Shane Oliver told NewsWire the escalation just added more 'uncertainty' but hadn't changed the probability of a July rate cut. 'I don't think the probability of a July cut has changed, we still expect a rate cut in July, August, November and February, taking the official cash rate to 2.85 per cent,' he said. Petrol prices could jump on the back of the Israel-Iran crisis. NewsWire / John Gass Credit: News Corp Australia IG market analyst Tony Sycamore said it would all depend on the fallout, with the worst-case scenario being Iran blocks the Strait of Hormuz, which is the primary route for oil producers including Saudi Arabia, Iraq, the UAE, and Kuwait. While pointing out blocking the Strait of Hormuz was a 'last resort' move by Iran, Mr Sycamore said if it did happen, it could impact interest rates. 'This would hamper central banks' ability to cut interest rates to cushion the anticipated growth slowdown from President Trump's tariffs, which adds another variable for the Fed to consider when it meets to discuss interest rates this week,' he said. Mr Oliver agreed, saying any blockage could lead to a dramatic spike in oil prices. 'During the Ukraine conflict we saw oil get to above $US120 a barrel, which would see petrol prices push well above $2 a litre, impacting inflation and more importantly household spending power,' he said. 'The RBA would then have to work out what is more important and I suspect they would look through the inflation spike and be more concerned about the negative impact on economic growth.' Higher oil prices could flow through to the wider economy. NewsWire/ Gaye Gerard Credit: News Corp Australia Regardless of whether it sways the Reserve Bank of Australia, the fallout will still hurt Australian consumers. Futures markets for Brent oil have spiked in recent days and are now pricing $US77 a barrel when it was just more than $US65 this time last week. Every $US1 increase in the price of oil roughly adds 1 cent a litre to how much Aussies will pay when they fuel up. MST Financial senior energy analyst Saul Kavonic warned that 'higher oil prices will flow directly through to the pump', adding to the cost-of-living pressures. 'If you start to see prolonged higher prices or even an energy crisis scenario, it will also flow through to our electricity prices via international gas prices,' Mr Kavonic told the ABC. He said this would eventually hit Australian consumers. 'It will flow through to the cost of living because nearly every single thing that you buy and use on a day-to-day basis has energy as a core input cost along its supply chain,' Mr Kavonic said.
Sky News AU
4 days ago
- Business
- Sky News AU
Iran-Israel conflict could create 'energy crisis we've not actually seen before', MST Financial's Saul Kavonic warns
Aussie drivers could face soaring petrol prices, adding to intense cost of living pressures, as the heated conflict between Iran and Israel may threaten global supply chains. Concerns have mounted Iran will block the Strait of Hormuz - the narrow waterway between the Persian Gulf and the Gulf of Oman which facilitates the transportation of about a fifth of the world's oil. Alongside this, Israeli attacks on oil facilities in Tehran and the South Pars gas field has sparked further concerns over prices. Oil jumped about US$7 per barrel on Thursday evening (US time) after the conflict began. MST Financial senior energy analyst Saul Kavonic said the recent jump was a 'risk premium' as the initial strikes had only targeted each nations' domestic energy infrastructure, but stressed there were major concerns about how the conflict would escalate. 'The risk here is twofold: One, could we see Israel directly attack Iranian exports, for example, on Kharg Island, which could take one and a half million barrels a day off the market,' Mr Kavonic told Sky News' Business Now. 'But also, could we see Iran target Western oil interests in Gulf States such as Iraq, which could also knock a few million barrels a day off the market. 'Just in that kind of scenario, you could see oil approach $100 a barrel.' He said the 'most severe scenario' was if Iran shut down the Strait of Hormuz, as it would create an 'energy crisis such that we've not actually seen before'. 'It would exceed the extremes we saw in the wake of the Ukraine War in 2022 and the reality is our energy markets globally have low resilience,' Mr Kavonic said. 'Strategic stocks, particularly in the US, are at record low levels and we're not well placed to actually deal with a major supply disruption like that, if it was to occur.' AMP's chief economist Shane Oliver issued a note on Friday warning Aussie drivers could soon see price hikes when they fill up their cars. 'Oil prices were already rising this month on signs of increasing risks and spiked another seven per cent after the attacks – with the rise so far this month threatening a flow on of around 12 cents a litre for Australian petrol prices if sustained at these levels,' he said. NRMA spokesperson Peter Khoury said it was not clear exactly how much more Aussies would be forced to fork out at the bowser as the situation in the Middle East constantly changes. 'It's impossible to forecast what it's going to mean at the bowser,' he said. 'A jump of $7 a barrel, if that was to stay the way it is, that's equivalent to about six or seven cents a litre, but the Aussie dollar has also strengthened, so that negates some of that increase. 'It's really difficult to get a sense of what it is going to means at the bowser.' The price rise will also depend on which city Aussie drivers live in, as the oil price follows its price cycle in each city, Mr Khoury said. 'It depends on where you live, but the trend has been for it to be falling - short of what happened last Friday with the kick-off of hostilities between Israel and Iran,' he said. 'How that plays out over the next few days will ultimately decide what sort of impact it'll have at the bowser.' Israel launched operation "Rising Lion" early on Friday, targeting key Iranian nuclear and military sites and reportedly killing dozens of people, including top army commanders and atomic scientists. In the days since, Iran has hit back by launching dozens of rockets and drones at Israel.
Sydney Morning Herald
5 days ago
- Business
- Sydney Morning Herald
Jim Chalmers faces a mission-critical national security test
Santos controls material critical gas infrastructure on the east and west coasts – including vital gas infrastructure supplying the markets on the south-east coast of Australia. Loading First on Santos' critical infrastructure list is the Cooper Basin that houses strategically important assets at Moomba in South Australia which are pivotal to the processing and transport of natural gas and ethane around the east coast of Australia. Next is Santos' stake in Queensland's major LNG project, GLNG, supported by substantial underground storage facilities suitable for natural gas, ethane and carbon dioxide. Plus Santos is a big player in the Western Australian market. Whether to entrust these assets to any foreign government is a big decision. None of this should suggest that this bid by XRG – a subsidiary of Abu Dhabi National Oil Company and including Abu Dhabi Development Holding Company and US-based investment company Carlyle – is doomed to fail. But the fact that Santos' shares have not risen to anywhere near the $8.89 share-offer price reflects both uncertainty and the length of time this deal will take until completion. There is a conga line of other approvals this deal must pass through, including regulators from PNG and Alaska – where Santos also holds significant assets. And everyone with the ability to block this deal will be looking to extract (or legally extort) some advantage. The bidder has already committed to keeping the Santos name and its head office in South Australia. Loading But that might be just the first of many hoops that need to be jumped through. The Australian government could also demand conditions to aid the domestic gas market. 'This is a huge opportunity for Labor to extract domestic gas concessions and remedy their failure to impose [gas] reservation a decade ago,' according to Kavonic. Kavonic also says pressure may be applied by the government to spin out some of Santos' domestic gas assets into a company controlled by Carlyle, which is the privately owned US member of the XRG consortium. The only cohort that won't be playing politics with this deal is the Santos board and shareholders. This company has had the 'for sale' sign plastered on it for so long that it's faded in the sunlight. Plenty of tyre-kickers have come and gone, and experts reckon that the current bidding consortium is the only party left in the auction room. This represents the third overture this year – with the first two being rejected by the board for under-balling on price. The new bid has landed at a price that Santos shareholders haven't seen in more than 10 years, so there is understandable excitement that their ship has finally come in. Shareholders should be very happy with the job the Santos board has done to attract a party willing to bid against itself. It is what investment bank advisers dream about. Now comes the arduous job of cutting deals with regulators that want to extract a few pounds of flesh.
