Escalating Mid-East conflict puts Australia's rate cut dreams on edge

ABC NEWS (Australia)

The oil price jumped when President Trump advised the Iranians to immediately evacuate Tehran. But it then fell back again to finish slightly lower decreasing Australia's chance of a July rate cut.

Transcript

00:00Markets are on edge, especially the oil market, but it's also true that the prolonged spike

00:07in the oil price that might have been expected when Israel and Iran went to war has not happened.

00:13The price did jump this morning when Donald Trump posted on Truth Social that Tehran residents

00:18should evacuate immediately, but soon fell back. Anything is still possible, of course,

00:23but so far, when viewed in today's dollars, the oil price is less than half what it was

00:27after the Iranian Revolution in 1979 and when China was growing rapidly before and after the GFC.

00:34The other good news is that for both the world and Australia, the oil intensity of the economy

00:39is well down. This refers to how much oil is needed per dollar of GDP, and with fuel efficiency

00:45and renewables, it's half what it was 50 years ago. The slightly bad news is that the odds

00:51of a July rate cut have come down from 97 to 80 per cent because of the possibility of higher

00:57inflation. Tonight, the crude oil price is roughly 70 US dollars a barrel, a dollar lower

01:03than last night, but still 10 per cent higher than this time last week. The US share market

01:07went up quite strongly last night. The local market was subdued with falls by resources

01:12stocks and banks. And the Aussie dollar is higher above 65 US cents. And finally, this graph

01:19might explain why Donald Trump wasn't too welcome in Kananaskis, Alberta, and went home early.

01:25It shows the tariffs he's put on the other G7 countries. All get the baseline 10 per cent plus

01:31a variety of extras, depending on how much steel, aluminium and cars they sell to America.

01:37So there might have been some awkward silences at the breakfast buffet. And that's finance.

01:42I'll see you.

01:44Let's go.

01:44So then let's go.

01:46Here we go.

01:47Here we go.

01:48Here we go.

01:50Here we go.

01:51Here we go.

01:52Here we go.

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