Latest / Early Edition with Ryan Bridge / Terry Collins: AA Principal Policy Advisor on the potential impact of the Iran conflict on the price of oil

Transcript

Terry Collins: AA Principal Policy Advisor on the potential impact of the Iran conflict on the price of oil · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The price of oil hasn't gone through the roof, despite
• 0:02
  Speaker 1: what's happening in the Middle East. Brent crude oil is
• 0:05
  Speaker 1: actually down four percent of the day to seventy dollars
• 0:09
  Speaker 1: seventy cents a barrel. This is US and there are
• 0:12
  Speaker 1: a couple of reasons for this. We'll get to those
• 0:14
  Speaker 1: in a second. Terry Collins, the principal AA advisor with
• 0:18
  Speaker 1: US Petrol Expert oil expert on the program, Terry, good morning,
• 0:22
  Speaker 1: Good morning on Yeah, were you surprised to see or
• 0:25
  Speaker 1: did the markets just price in trouble in the Middle East?
• 0:30
  Speaker 2: You're right initially what they did when their text were launched,
• 0:33
  Speaker 2: as they just twicted the risk. Everybody now was just
• 0:37
  Speaker 2: sitting back and seeing how the Uranians retaliate to the
• 0:40
  Speaker 2: US strikes. They've talked, well threatened to shut straight up
• 0:44
  Speaker 2: themors and that could take a variety of forms, everything
• 0:47
  Speaker 2: from just stopping some targeted ships of certain nationalities, putting
• 0:52
  Speaker 2: minds down, to directly attacking shipping, and each of those
• 0:55
  Speaker 2: would have an impact on the price of oil.
• 0:58
  Speaker 1: Interesting that the markets are only bedding on a twenty
• 1:00
  Speaker 1: five to thirty percent chance of that actually happening because
• 1:04
  Speaker 1: they've threatened to do this before and nothing came of it. Right.
• 1:08
  Speaker 2: Yeah, I think what everybody's sitting back and looking is
• 1:10
  Speaker 2: the Uranians know that they came to go full on
• 1:12
  Speaker 2: with the US and its neighbors, so they've got to
• 1:16
  Speaker 2: save face. They've got to be some form of recaliation.
• 1:19
  Speaker 2: Let's say to the world that we will defend ourselves
• 1:22
  Speaker 2: and if you strike us, we will strike back. But
• 1:24
  Speaker 2: I think they're scared about going too far because of
• 1:27
  Speaker 2: the consequences of that.
• 1:29
  Speaker 1: Also, the other thing about the Strait that I was
• 1:31
  Speaker 1: reading about yesterday, part of it is actually in Oman's waters,
• 1:36
  Speaker 1: with vessels actually able to go in their waters to
• 1:40
  Speaker 1: get through. So can they actually completely block it off?
• 1:45
  Speaker 2: Well, the straight that its scenarios is about thirty three
• 1:48
  Speaker 2: kilometers wide and for the cook straight of that scenarios
• 1:52
  Speaker 2: is about twenty two. But they've got these shipping rains
• 1:54
  Speaker 2: about three kilometers wide in both directions. One of them
• 1:57
  Speaker 2: will be in the Omar side, so that's in one direction.
• 2:01
  Speaker 2: Practicalities of it, if they're going to start shooting each other,
• 2:04
  Speaker 2: will laying mines, They'll just do it discuruent where they
• 2:06
  Speaker 2: has drop them. So what that happens is the shipping
• 2:09
  Speaker 2: companies because of the insurance issues, won't want to take
• 2:12
  Speaker 2: the ships in there. They'll do that voluntary. I'll think
• 2:14
  Speaker 2: the risk of being struck by a mine the environment
• 2:17
  Speaker 2: will clean up is too significant, and that's how they're
• 2:20
  Speaker 2: will slow down the supply of will all right.
• 2:23
  Speaker 1: And the talk of potentially doubling the price of oil
• 2:26
  Speaker 1: per barrel overblown.
• 2:29
  Speaker 2: Overblown, and probably if it did happen, it would be
• 2:32
  Speaker 2: a short term spike. What we saw after the Russian
• 2:34
  Speaker 2: invasion of Ukraine is the world did spike around the
• 2:37
  Speaker 2: one twenty one to thirty, but then as alternative roots
• 2:41
  Speaker 2: of will going back onto the market were established, those
• 2:44
  Speaker 2: prices drop down. We've seen from a number of these
• 2:46
  Speaker 2: geopolitical events that there's an immediate short term spike and
• 2:51
  Speaker 2: then the court of markets settled down as alternative arrangements
• 2:55
  Speaker 2: are made for delivering oil to the market.
• 2:57
  Speaker 1: Terry, appreciate you time this morning, Terry Collins from AA.
• 3:00
  Speaker 1: For more from earlier edition with Ryan Bridge, listen live
• 3:03
  Speaker 1: to Newstalk Set B from five am weekdays, or follow
• 3:07
  Speaker 1: the podcast on iHeartRadio.