Latest / Best of Business / Kelly Eckhold: Westpac Chief Economist on oil prices dropping amid Iran deal negotiations

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Kelly Eckhold: Westpac Chief Economist on oil prices dropping amid Iran deal negotiations · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Let's talk money and Economics with Kelly Echold, who is
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  Speaker 2: Westpac's chief economist. Thank you for joining us this holiday.
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  Speaker 3: Kelly, good morning.
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  Speaker 2: It's day ninety three of the Middle East War. But
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  Speaker 2: the all places are going down.
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  Speaker 3: Yeah, old groundhog day again. I mean, the tendency has
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  Speaker 3: been that we get to peak world peace around about
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  Speaker 3: the time of the closing of the stock markets on
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  Speaker 3: Friday US time, and then shortly after that thing start
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  Speaker 3: falling apart. And this is pretty much what has happened
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  Speaker 3: this weekend. Also, we've had a big fall in oil
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  Speaker 3: prices through the last week, and especially on Friday because
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  Speaker 3: there were stories of an imminent Hall Moves opening agreement
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  Speaker 3: that was going to be agreed. You know, oil's down
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  Speaker 3: eight percent. I think for the week, Brent cruise around
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  Speaker 3: ninety one dollars a barrel, so certainly prices that have
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  Speaker 3: stayed there. Then petrol at the pump here ninety one,
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  Speaker 3: petrol below three bucks in our futurech I'm sure a
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  Speaker 3: lot of people like mediators had sent a proposal to
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  Speaker 3: Trump for agreement, and he had noted on a truth
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  Speaker 3: social account that he was going to make what he
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  Speaker 3: called a final determination on the Iran issue. So it
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  Speaker 3: was in this meeting, but we weren't really that like.
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  Speaker 3: He didn't make a final determination. What he actually did
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  Speaker 3: was he left without making a decision to went to
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  Speaker 3: the golf course. An article later on from leaked by
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  Speaker 3: officials of the New York Times explained what had happened.
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  Speaker 3: They offered a deal where the US would lock a
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  Speaker 3: few billion of frozen Iranian funds in return for dropping
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  Speaker 3: the blockade and sanctions, but an Iranian harassment of his
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  Speaker 3: bowler and Lebanon was supposed to finish with discussions on
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  Speaker 3: the nuclear program later. But Trump doesn't want to do
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  Speaker 3: that deal. He can't do that deal because that's pretty
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  Speaker 3: much the same deal he excoriated Obama for doing ten
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  Speaker 3: years ago. So he's basically sent it back to them.
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  Speaker 3: He said to Ara Nana, I need a lot more
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  Speaker 3: commitment out of you before I give you any money.
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  Speaker 3: The IGC can't accept won't accept this, so they'll sit
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  Speaker 3: on this for another week. In fact, on Saturday, they
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  Speaker 3: did a missile attack of a Kuwaiting Air base destroyed
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  Speaker 3: if some US drones who heard a few service people.
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  Speaker 3: So it's not really sounding like we're on the way
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  Speaker 3: to world peace really after all. So we're basically back
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  Speaker 3: we started, I think, And I guess it's interesting to
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  Speaker 3: note that the Chevron CEO had an interview in the
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  Speaker 3: press yesterday and he basically said that given the blow
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  Speaker 3: level of inventores now these oil places are going to
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  Speaker 3: have to go a lot higher because everyone's running out
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  Speaker 3: of oil for their refineries.
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  Speaker 2: Yeah, the inventories are very low. Now. This makes a
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  Speaker 2: very interesting situation for Anna Bremen and the Reserve Bank
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  Speaker 2: because we've got at the moment lower oil prices, but
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  Speaker 2: they could go up higher. We've got to improved consumer
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  Speaker 2: and business confidence, and we've got all the speculation about
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  Speaker 2: July and the possibility of raising the ocr So what's
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  Speaker 2: down are going to make of all the developments over
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  Speaker 2: the weekend?
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  Speaker 3: Well, I mean that's the que question. I mean. She
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  Speaker 3: had a full scale insurrection on her MPC last week.
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  Speaker 3: The three external members ganged up against her and demanded
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  Speaker 3: a hike. Her internal colleagues would try to mount a
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  Speaker 3: reguard action by voting for a whole but she needed
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  Speaker 3: to basically use both her own vote and their casting
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  Speaker 3: vote to overwhelm the push for a rate hike. It's
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  Speaker 3: pretty extraordinary, I reckon, because you have to remember that
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  Speaker 3: why do we have these external NPC members. Were there
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  Speaker 3: supposed to be the check against internal groupthink, and there
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  Speaker 3: are also supposed to be the people that are in
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  Speaker 3: better touch with the economy as well, because the usually
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  Speaker 3: business people. Bremen doesn't want to tighten because she thinks
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  Speaker 3: it's too soon to tell whether there's going to be
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  Speaker 3: any second round inflation effects and there's a bit of
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  Speaker 3: downside risk of the economy. I think that's probably fair
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  Speaker 3: enough to some extent. But you know, as you've said,
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  Speaker 3: the fall and oil prices really does kind of like
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  Speaker 3: put in in the balance exactly how high inflation is
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  Speaker 3: going to go. And we did see business and consumer
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  Speaker 3: confidence rise on Friday, bet as people have noticed the
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  Speaker 3: lower oil prices and petrol prices. But you know, with
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  Speaker 3: those lower petrol prices that means the economy can come back,
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  Speaker 3: so and we do have quite low interest rates, so
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  Speaker 3: I just suspect it's going to be quite hard to
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  Speaker 3: work out what they're going to do in July. Market
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  Speaker 3: seem absolutely sure that she's going to raise rates. I'm
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  Speaker 3: not so sure about that. I don't think she probably
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  Speaker 3: really wants to. So yeah, it'll be very interesting to
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  Speaker 3: seew it goes.
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  Speaker 2: If she doesn't want to end then still split. Of course,
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  Speaker 2: she still has the casting vote in the staff vote
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  Speaker 2: for her, So yeah, here we go a yes status quo.
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  Speaker 2: It's quite uncertainty, Kelly hair Cold, I thank you so
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  Speaker 2: much for your time today.
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