ABC News Daily Alan Kohler on inflation and the Israel-Iran conflict
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Jun 19, 2025 Alan Kohler, ABC TV's finance expert, discusses the ongoing Israel-Iran conflict's implications for Australia's economy. He highlights that, while the situation could escalate oil prices and inflation, there’s no immediate cause for concern. Kohler emphasizes the strategic significance of the Straits of Hormuz and potential disruptions in oil production. He also explores how rising petrol prices could trigger broader economic effects, resembling interest rate hikes, while predicting that financial markets will remain stable unless complications arise.
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Oil Price Dynamics in War
- War impacts oil prices in two ways: short-term spikes followed by longer-term drops due to economic slowdown.
- After Russia invaded Ukraine, oil prices spiked 30% but returned to pre-invasion levels within eight weeks.
Stable Oil Amid Conflict
- Israel-Iran conflict initially raised oil prices by about 10% but prices stabilized quickly.
- Global oil supply is expected to exceed demand this year, easing panic despite tensions.
Straits of Hormuz’s Global Impact
- The Straits of Hormuz is a critical chokepoint, with 25% of global seaborne oil passing through.
- Though Iran could try to block it, the US and Israel would likely prevent any lasting closure.