Latest news with #OrganisationofthePetroleumExporting
IOL News
20-06-2025
- Business
- IOL News
Fuel price pain as missiles fly
While missiles fly thousands of kilometres away, the effects of a deepening conflict between Israel and Iran are beginning to reach South African shores - not through politics or security, but through rising prices at the pump and pressure on already-stretched household budgets. A surge in global oil prices, triggered by military strikes on strategic energy assets and growing fears of supply disruption, is stoking inflation concerns that could ripple through the economy and stall any hopes of interest rate relief. The bombardment of Iranian military targets by Isreal erupted over a week ago as airstrikes targeted Iranian military infrastructure, including pivotal oil and gas facilities such as the South Pars gas field and the Shahr Rey oil refinery, provoking retaliatory missile attacks by Iran on major Israeli cities. This has raised alarm bells among market watchers, particularly given Iran's critical role as the third-largest oil producer within the Organisation of the Petroleum Exporting Countries (OPEC+), contributing around four million barrels of crude oil per day and controlling access to the vital Strait of Hormuz. The Strait of Hormuz is a crucial maritime chokepoint through which approximately 18–19 million barrels per day or 20% of global oil shipments pass, making any potential disruption a considerable concern for worldwide oil supply. Despite Iran maintaining crude exports at 2.2 million barrels per day amid the conflict, rising shipping costs and delays due to the potential blockade of this strategic waterway could influence inflation across the globe. Nolan Wapenaar, co-chief investment officer at Anchor Capital, on Friday said the blockade of the Strait of Hormuz would have far-reaching consequences for South Africa's economy. Wapenaar said this would obviously be a major blockage in the supply of oil to the rest of the globe. 'This could drastically impact the availability of oil and one would expect significantly higher prices. The clear impact in South Africa is higher inflation and quite potentially rising interest rates again,' Wapenaar said. 'The impact of a major supply shock to oil will be more pronounced and detrimental to South Africa. We would expect pressure on the terms of trade from rising oil prices, the South African rand could well weaken, exacerbating inflation pressures beyond just the impact of oil prices and supply.' According to the OPEC+, the global oil demand growth forecast for 2025 remains at 1.3 million barrels per day. The eight OPEC+ countries, which previously announced additional voluntary adjustments, have agreed to start a gradual and flexible return of the 2.2 million barrels per day by implementing a production adjustment of 411 000 barrels per day in July 2025 in view of a steady global economic outlook and current healthy market fundamentals. Analysts warn that the conflict has the potential to reshape power relations within the Middle East and influence OPECʼs internal dynamics as Iran's role as a major oil producer and its strategic position in the Gulf give it considerable leverage. Bianca Botes, director at Citadel Global, said the Strait of Hormuzʼs strategic importance cannot be overstated. 'Any disruption – whether due to military action, electronic interference affecting navigation systems, or blockades – could severely constrain global oil supply. Recent incidents, such as the collision and fire involving two oil tankers near the strait, have heightened these concerns,' Botes said. 'While OPEC members possess some excess production capacity that could theoretically offset Iranian supply losses, the risk of a prolonged or expanded conflict introduces significant uncertainty. 'Analysts warn that oil prices could spike to $100/barrel or even $120/barrel if supply through the Strait of Hormuz is disrupted. Such a price shock would reverberate through global markets, impacting inflation, consumer costs, and economic growth worldwide.' South Africa consumes around 530 000 barrels of oil per day, or more than 25 million litres of petroleum products each year, facilitated by imports and its three operational refiners. Petrol and diesel are the most important petroleum products, accounting for more than 85% of consumption. While the country refines imported crude oil, a portion of its fuel supply also comes from synthetic fuels produced from coal and natural gas. The increase in the fuel price would come as consumers are already battling with the high cost of living after the finance minister hiked the General Fuel Levy (GFL) by 16 cents per litre for petrol and 15 cents per litre for diesel — the first increase in three years — on the back of inflationary pressures. The price of Brent crude oil traded around $77 (around R1 390) per barrel on Friday, heading for a third consecutive weekly gain as escalating hostilities in the Middle East continued to fuel fears of regional supply disruptions. However, Investec chief economist Annabel Bishop allayed fears of any fuel supply shortages but said the blockade of the Strait of Hormuz would raise shipping costs, impacting inflation and also increase shipping delays. 'South Africa mainly gets oil from Africa and Saudi Arabia (which is expected to stay out of the conflict) so the supply is not expected to be interrupted,' Bishop said. 'We are less impacted as we get our oil supply from Africa not the middle east and are food secure. We would be impacted on price not supply as all oil is priced off Brent crude.' Rising oil prices have immediate and far-reaching consequences. Higher crude costs translate into increased transportation and manufacturing expenses, feeding into broader inflationary pressures. This dynamic can slow economic activity by reducing consumer purchasing power and increasing production costs. Inflation in South Africa has held steady at 2.8%, paving the way for potential interest rate cuts though several factors may yet cause the Reserve Bank to adopt a more hawkish stance. Everest Wealth CEO, Thys van Zyl, said rising tensions in the Middle East and discussions about lowering South Africa's inflation target band were two key concerns that could temper expectations of further rate cuts. 'This conflict could quickly filter through to fuel prices and transport inflation – and that will narrow the room for rate cuts,' Van Zyl said. 'Although food inflation rose sharply in May due to the impact of foot-and-mouth disease on beef prices, transport inflation was the only category with negative growth thanks to the past year's decline in fuel prices – which helped keep overall inflation low.' BUSINESS REPORT
The Advertiser
20-06-2025
- 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
20-06-2025
- 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
19-06-2025
- 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
19-06-2025
- 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.
