00:02The conflict in the Persian Gulf has now been going for 140 days.
00:06And I think it's fair to say it's been a confusing 20 weeks.
00:11Has it been an oil shock or not?
00:14It seemed like it was a first.
00:15The Brent benchmark oil price shot up above US$110 a barrel
00:20and it looked like staying there and maybe even going higher.
00:22And the price of diesel in Australia peaked at $3 a litre
00:26with petrol not far behind.
00:27But then it wasn't a shock, even though the ceasefire
00:31only got oil tanker traffic through the Strait of Hormuz
00:33back to a third of what it was, and then only briefly.
00:37And when it shot again last week,
00:38the oil price didn't go up as much as before.
00:41It's not just the oil market that's less anxious than what it was.
00:45Since mid-April, money markets have cut the odds
00:47of another rate hike this year from a certainty to 56%.
00:51Now, part of the reason for this unexpected calm
00:54is that oil supply out of the Persian Gulf did not go to zero.
00:57It halved.
00:59They got it out in other ways.
01:00And just as important was that the world's largest consumer of oil,
01:05China, cut its imports by 40%.
01:08Now, how they did that is a mystery.
01:10But analysts are saying that the price of oil from here
01:13will mainly depend on whether and how quickly
01:16China resumes normal demand,
01:19which makes the immediate future doubly uncertain.
01:22Will the Strait of Hormuz stay closed?
01:24And will China go back to buying 10 million barrels of oil a day?
01:28And meanwhile, the Reserve Bank's finger is on the interest rate trigger,
01:33ready to respond if those things happen.
01:36Twice if necessary.
