Oil and petrol prices surge after conflict erupts in the Middle-East

After an initial surge, oil prices could continue to rise if the war between Israel and Hamas spreads to major oil producing neighbour, Iran.

Transcript

00:00 Some motorists will definitely be eyeing petrol prices a bit more anxiously after that surge

00:07 in oil prices yesterday by more than 4%.

00:10 Now it's already pretty expensive here, you can see at the station behind me it's around

00:15 210 cents per litre.

00:18 But experts say that it's actually been falling, that price of petrol, and that these sudden

00:23 surges in the oil price are pretty expected, pretty normal, particularly when it comes

00:29 to conflict in the Middle East.

00:31 But what we're watching for really is whether that conflict spreads, and we know that some

00:37 in Israel are blaming Iran for the attacks by Hamas.

00:42 Iran has been a supporter of Hamas, and if the US decides it might actually crack down

00:48 on sanctions against Iran, which could restrict the flow of oil shipments through the Strait

00:55 of Hormuz, which is a key oil trading route, and that could see oil prices rise, and experts

01:01 say that then that could have a flow-on effect.

01:04 It could see petrol prices in Australia here rise about maybe 7 to 10 days after that oil

01:10 price increase, if it does become a broader, kind of more permanent thing.

01:15 But the analysts that we've spoken to have said that it really does depend on whether

01:19 or not that conflict spreads.

01:22 If higher oil prices do become a more permanent fixture, and we see that flow-on effect to

01:27 petrol prices here in Australia, could see inflationary pressures as well.

01:32 We know that petrol prices are a key factor of the Consumer Price Index, which is that

01:37 inflationary measure that the Reserve Bank relies on when it's setting interest rates.

01:43 So if we were to see that go up, then we could see more interest rate rises down the line.

01:49 But really at the moment, most analysts are saying it's just too soon to be making any

01:54 firm predictions about petrol prices or the CPI, and that we'll have to wait and see how

01:59 the conflict pans out.

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