Latest news with #Kavonic
Sky News AU
25-06-2025
- Business
- Sky News AU
‘Drastically increase network costs': Top energy expert says Victorian gas bans to hurt small businesses and shrink manufacturing capabilities
Top energy experts have condemned the Victorian Allan government's sweeping gas bans arguing that as households are weaned off the system manufacturers and small businesses will consequently bear the brunt of the rising costs to extract gas. The Allan government announced on Tuesday it would move to scrap its policy to force owner-occupiers to switch from gas heating to electric systems when they expire after receiving intense backlash from consumers and industry magnates. The Victorian government unveiled a number of measures in 2023 which sought to phase out the use of gas in the state, yet has since softened multiple pieces of the policy. The draft plans would have forced hundreds of thousands of Victorians still reliant on gas heaters and cooktops to shift to electric models as part of the government's net zero emissions pathway. However, the government is continuing to persist with numerous elements of the policy raising the ire of energy analysts. These include requiring all gas hot water systems to be replaced with electrical alternatives once they break down and all new homes and commercial buildings having to be built completely electric from 1 March 2027. While Premier Allan claimed the move would push down household electricity bills, Senior Energy Analyst at MST Financial Saul Kavonic said that despite minor amendments being made, the policy would significantly reduce the states manufacturing base which is already at record lows. 'What is telling in this backtrack in Victoria and a big part of it is what's starting to dawn on the Victorian government is if they actually were successful in going down their path of reducing gas usage for heating, what it actually does is it starts to drastically increase the network costs on the manufacturing base,' Mr Kavonic said. Mr Kavonic who has worked in the sector for over 15 years said that the remaining manufacturers in the state would 'then have to cover a much larger portion of that fixed infrastructure amortisation,' as the cost of gas became more expensive as demand decreased. 'You'll see an even further hastening of the deterioration of the manufacturing and small business sector in Victoria,' Mr Kavonic reiterated. Energy analysts outlined that if hundreds of thousands of homes were swapped over to electricity-based services, then the grid would be overloaded in the short term, potentially putting the viability of the entire system at risk. The government back down delayed all changes to energy rules which were set to commence next year to March 1, 2027. Victoria faces crippling gas shortages by 2029 according to the Australian Energy Market Operator as existing supplies in the Bass Strait have dried up. Mr Kavonic said the government's alternating position risked threatening investment in critical gas exploration projects further. 'A lot of industry folks over the last 12 hours have been questioning if the energy minister in Victoria Lily D'Ambrosio has effectively been overruled by her own party in this, because she's been one of the biggest advocates of demonising gas use and getting our customers off gas,' he said. 'What's really important is if Victoria actually wants to fix their gas supply security issue they need to have a very clear statement backed up by actions that they see a role for gas in the future.' Mr Kavonic said the appetite for investment into gas security was "still not going to return" given the Allan government was "ultimately sitting on the fence here and only partly walking it back". The government says that by 2029 there will be a reduction of 12 petajoules of gas in every household and business which they argue will help fuel industrial capacities.
CNBC
23-06-2025
- Business
- CNBC
Oil at $100 a barrel? U.S. role in Iran-Israel fight fuels market jitters
Oil markets are entering a new phase of uncertainty after the U.S. entered the war between Iran and Israel, with experts warning of triple-digit prices. Investors are closely watching for Iran's reaction following the U.S.' strikes on its nuclear facilities, with Iran's foreign minister warning his country reserved "all options" to defend its sovereignty. Oil futures were up nearly 3% as of early Asia hours. U.S. crude oil rose 2.93% to $76 per barrel, while global benchmark Brent was up 2.86% at $79.22 per barrel. "There is real risk of the market experiencing unprecedented supply disruptions over coming weeks, of a much more severe nature than the oil price shock in 2022 in wake of the Ukraine war," said MST Marquee's senior energy analyst Saul Kavonic. While the market reaction post U.S. strikes has been less aggressive, relative to just over a week ago when Israel launched airstrikes against Iran, industry watchers believe that the latest developments usher in a new era of volatility for the oil markets, especially as they await for potential Iranian countermeasures. Threats of blocking Strait of Hormuz, after Iran's parliament approved closing it as per state media, have added to market jitters. The strait, which connects the Persian Gulf to the Arabian Sea, is a critical artery for global oil trade with about 20 million barrels of oil and oil products passing through it per day. That makes up almost one-fifth of global oil shipments. If Iran does close the Strait of Hormuz, Western forces will likely "directly enter the fray" and try to reopen it, Kavonic told CNBC, adding that oil prices could approach $100 per barrel and retest the highs seen in 2022, if the closure goes beyond more than a few weeks. "Even a degree of harassment of passage through the Strait, short of a full closure, could still see a serious heightening of oil prices," said the senior energy analyst. Kavonic's view is echoed by other industry experts. The U.S. and allied military would eventually reopen the Strait, but if Iran employed all its military means, the conflict could "last longer than the last two Gulf Wars," said Bob McNally, president of Rapidan Energy Group. And should Iran decide to attack Gulf energy production or flows, it has the capability to disrupt oil and LNG shipping, resulting in large oil and LNG price spikes. "A prolonged closure or destruction of key Gulf energy infrastructure could propel crude prices to above $100," he said. The CBOE crude oil volatility index, which measures the market's expectation of 30-day volatility in crude oil prices, is at March 2022 levels it hit shortly after Russia invaded Ukraine. While there has been some level of uncertainty with regards to how developments in the Middle East could play out for oil supplies, Lipow Associates' Andy Lipow noted that the current developments carry a different weight. "This time feels different, given the barrage of missiles that have been fired for over a week and now the direct involvement of the USA," he said, adding oil could hit $100 per barrel should exports through the Strait of Hormuz be affected. While an attempt to block the Hormuz waterway between Iran and Oman could have profound consequences for the wider economy, threats of blocking the strait have mostly been rhetorical, with experts saying that it is physically impossible to do so. "So the picture is a little bit mixed, and I think traders will err on the side of caution, not panicking unless there is more real evidence to do," said Vandana Hari, founder and CEO, Vanda Insights. Iran in 2018 threatened to close the Strait of Hormuz amid heightened tensions after the U.S. exited the nuclear deal and reinstated sanctions. Similar threat were issued in 2011 and 2012, when senior Iranian officials — among them then–Vice President Mohammad-Reza Rahimi — warned of a possible closure if Western nations imposed more sanctions on Iran's oil exports over its nuclear activities. Additionally, it is worth noting that Iranian energy infrastructure has not been a target thus far even with the recent conflagrations, said Rebecca Babin, senior energy trader at CIBC Private Wealth. "It appears that both sides have an incentive to keep oil out of the line of fire, at least for now," she said.
Herald Sun
17-06-2025
- 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
17-06-2025
- 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
17-06-2025
- 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.
