Middle East Conflict Sparks Oil Price Surge

The conflict in the Middle East has pushed the oil price up to 4 to 5 per cent since Monday.

However, experts do not anticipate a repeat of the 1973 Yom Kippur War, which triggered a massive spike in crude oil prices and global inflation. 

Israel does not produce a substantial amount of oil, and unless there is direct involvement from Iran, the impact on oil prices is expected to be relatively minor.

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AMP’s chief economist, Shane Oliver, predicts that the price of oil will continue to rise, potentially leading to higher petrol prices for Australian drivers. 

He said the risks are tilted toward the “upside in the near term”, especially if Russia reduces its oil production. In such a scenario, petrol prices could reach around $2.25 per litre.

National Australia Bank’s chief economist, Alan Oster, said that petrol prices are likely to rise further, depending on oil prices and the Australian dollar’s value. 

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“(We would) normally see an initial shock (in the price of oil) like this in these circumstances,” spokesperson Peter Khoury said.

“(Further price hikes) depend on if it escalates to involve Iran and Syria.”

Higher petrol prices could contribute to inflation in Australia, putting additional strain on the Reserve Bank. 

The conflict in the Middle East is closely monitored for its impact on global energy markets and financial stability. 

However, it remains uncertain how the situation will evolve and how it will ultimately affect oil and petrol prices in Australia and the broader economy.

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