Latest news with #OrganisationofthePetroleumExporting
The Advertiser
12 hours ago
- Business
- The Advertiser
Oil set to rise again amid Israel-Iran conflict
Oil prices were on track to rise for the third straight week, with investors on edge as the week-old war between Israel and Iran showed no signs of either side backing down. Brent crude futures fell $1.57 cents, or 2 per cent, to $77.28 a barrel. On a weekly basis, it was up 3.9 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 86 cents, or 1.1 per cent, to $76. The more liquid WTI for August rose 0.7 per cent, or 50 cents to $74. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. "Oil prices remain high due to doubled tanker rates and ships avoiding the Strait of Hormuz," said Phil Flynn, analyst at The Price Futures Group. "The risk to supply is keeping them on edge while there have been no major disruptions of Iranian exports," Flynn said. Iran is the third-largest producer among members of the Organisation of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd)of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price" and Iran warned against a "third party" joining the attacks. The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG. Oil prices were on track to rise for the third straight week, with investors on edge as the week-old war between Israel and Iran showed no signs of either side backing down. Brent crude futures fell $1.57 cents, or 2 per cent, to $77.28 a barrel. On a weekly basis, it was up 3.9 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 86 cents, or 1.1 per cent, to $76. The more liquid WTI for August rose 0.7 per cent, or 50 cents to $74. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. "Oil prices remain high due to doubled tanker rates and ships avoiding the Strait of Hormuz," said Phil Flynn, analyst at The Price Futures Group. "The risk to supply is keeping them on edge while there have been no major disruptions of Iranian exports," Flynn said. Iran is the third-largest producer among members of the Organisation of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd)of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price" and Iran warned against a "third party" joining the attacks. The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG. Oil prices were on track to rise for the third straight week, with investors on edge as the week-old war between Israel and Iran showed no signs of either side backing down. Brent crude futures fell $1.57 cents, or 2 per cent, to $77.28 a barrel. On a weekly basis, it was up 3.9 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 86 cents, or 1.1 per cent, to $76. The more liquid WTI for August rose 0.7 per cent, or 50 cents to $74. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. "Oil prices remain high due to doubled tanker rates and ships avoiding the Strait of Hormuz," said Phil Flynn, analyst at The Price Futures Group. "The risk to supply is keeping them on edge while there have been no major disruptions of Iranian exports," Flynn said. Iran is the third-largest producer among members of the Organisation of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd)of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price" and Iran warned against a "third party" joining the attacks. The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG. Oil prices were on track to rise for the third straight week, with investors on edge as the week-old war between Israel and Iran showed no signs of either side backing down. Brent crude futures fell $1.57 cents, or 2 per cent, to $77.28 a barrel. On a weekly basis, it was up 3.9 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 86 cents, or 1.1 per cent, to $76. The more liquid WTI for August rose 0.7 per cent, or 50 cents to $74. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. "Oil prices remain high due to doubled tanker rates and ships avoiding the Strait of Hormuz," said Phil Flynn, analyst at The Price Futures Group. "The risk to supply is keeping them on edge while there have been no major disruptions of Iranian exports," Flynn said. Iran is the third-largest producer among members of the Organisation of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd)of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price" and Iran warned against a "third party" joining the attacks. The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG.
Perth Now
14 hours ago
- Business
- Perth Now
Oil set to rise again amid Israel-Iran conflict
Oil prices were on track to rise for the third straight week, with investors on edge as the week-old war between Israel and Iran showed no signs of either side backing down. Brent crude futures fell $1.57 cents, or 2 per cent, to $77.28 a barrel. On a weekly basis, it was up 3.9 per cent. The US West Texas Intermediate crude for July - which did not settle on Thursday as it was a US holiday and expires on Friday - was up 86 cents, or 1.1 per cent, to $76. The more liquid WTI for August rose 0.7 per cent, or 50 cents to $74. Prices jumped almost 3 per cent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. "Oil prices remain high due to doubled tanker rates and ships avoiding the Strait of Hormuz," said Phil Flynn, analyst at The Price Futures Group. "The risk to supply is keeping them on edge while there have been no major disruptions of Iranian exports," Flynn said. Iran is the third-largest producer among members of the Organisation of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd)of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price" and Iran warned against a "third party" joining the attacks. The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. "The "two-week deadline" is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action,.. which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, analyst at IG.
The Age
21 hours ago
- Business
- The Age
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
Sydney Morning Herald
21 hours ago
- Business
- Sydney Morning Herald
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
NDTV
a day ago
- Business
- NDTV
Why We Needn't Worry About Oil Prices Amidst Israel-Iran Conflict (For Now)
Oxford, England: The unexpected attack by Israel on Iran, a major oil-producing nation, may undermine anaemic global economic growth and hinder central banks' ability to cope in an already uncertain market. Iran exports up to 2 million barrels of oil and refined petroleum products per day (million barrels per day – mbd). Due to long-standing sanctions, most of this oil is sold to China at discounted prices. Normally, a sudden loss of the Iranian exports (equivalent to around 2% of global oil supply) would trigger panic. But Opec (the Organisation of the Petroleum Exporting Countries) is in the process of reversing the production cuts imposed early in the COVID pandemic (and subsequently). This leaves the organisation with an unusually large spare capacity of at least four million barrels per day, most of which is held by Saudi Arabia (up to 3.5 million) and the UAE (about one million). On top of that, the International Energy Agency (IEA) holds more than 1.2 billion barrels of emergency reserves across OECD countries, ready to be deployed if needed. China, too, has significant reserves, though the line between its commercial and strategic stocks is less clear. Additionally, some 40 million barrels of Iranian oil are stranded aboard anchored ships near China, unsold due to declining industrial demand and electric vehicles hitting petrol consumption. In May, China's refinery throughput fell 1.8% year-on-year, with no signs of a swift rebound. What's more, the IEA is expecting global oil production to exceed 1.8 mbd, compared to its earlier projection of only 0.72 mbd, leaving a massive surplus of supply over demand. China has proven to be an opportunistic buyer. It did not buy the excess Iranian oil supplies at US$65 (£48) a barrel earlier this year, and whether it buys at US$75 (at the time of writing) or higher, may be a signal of how seriously it views the Middle East tensions. Meanwhile, other Asian importers have been quick to secure prompt shipments from west Africa, and have eyes on US supplies as well. Thanks to this surplus capacity and stagnant demand, the oil market's reaction has been more muted than many feared. Prices briefly spiked by US$10 but have since eased. It appears that the market is assessing whether the hostilities will escalate. If so, the impact on energy prices and inflation could be more significant. A Conflict Of Convenience It remains somewhat unclear why Israeli prime minister Benjamin Netanyahu chose this moment to strike Iran, especially in the middle of peace negotiations between Iran and the United States. In a recent interview, former Israeli leader Ehud Barak admitted that even a full-scale attack would only delay Iran's nuclear ambitions by weeks or months at best, with US support. Diplomacy, then, may remain the more effective route. This was the rationale behind the Iran nuclear deal brokered under US president Barack Obama, a deal later dismantled by Trump under pressure from Netanyahu. So, Netanyahu's endgame might be political survival and diverting attention from the humanitarian catastrophe in Gaza. If Iran feels sufficiently cornered, it may retaliate by shutting down the Strait of Hormuz – a strategic chokepoint through which up to 20 million barrels of oil pass daily. A lot of that oil can be diverted through alternative supply routes such as a large (6 mbd) Saudi East-West pipeline leading to the Red Sea. There is also the UAE pipeline, which avoids the Strait of Hormuz and leads to the port of Fujairah, in the Gulf of Oman. Nevertheless, the increased risk and higher shipping costs would certainly result in much higher prices at the pump. The cost of insurance for ships travelling through the Strait of Hormuz have jumped 60% since the start of the conflict. That, combined with the broader economic fallout, could have global repercussions. The World Bank recently downgraded its global growth forecast to 2.3% for 2025 – nearly half a percentage point below previous estimates. While a worldwide recession is not yet predicted, the bank warned that growth this decade could be the slowest since the 1960s. Among the leading culprits is Trump's tariff policy, which has strained global trade, reduced efficiency and effectively imposed a tax on consumers both in the US and elsewhere. The fear of inflation has led to rising long-term bond yields. Expectations of higher inflation and high bond yields, in turn, constrain central banks from stimulating the economy by cutting interest rates. This is a key tool used by the US Federal Reserve to influence the cost of borrowing throughout the US economy and thus attempt to stimulate economic activity. And in spite of the recent US-UK trade agreement, the deal includes a 10% tariff on imports from the UK – with steel still at 25%. UK economic growth had already slipped into negative territory before the conflict began. Now, with the added strain of geopolitical instability, households are bracing for higher petrol prices at the pump, sluggish wage growth and rising unemployment. The conflict in the Middle East may not have sparked a global oil crisis yet, but it certainly won't improve anyone's cost of living.
