Why Aussie shouldn't worry about oil prices
Australian motorists are being urged not to panic after the price of crude oil rose in recent days on the back of the geopolitical tensions in the Middle East.
Motorists in Australia could be spared from the worst of the fallout from the Middle-East, even as the price of the commodity surges.
Futures markets for Brent oil have spiked in recent days and are now buying $US75 a barrel, when it was just over $US65 this time last week.
It comes as tensions out of the Middle East flare up, after Israel undertook pre‑emptive attacks on Iran.
It said the strikes were aimed at eliminating Iran's nuclear program and ballistic missile capabilities, but the fears in the market are based on what Iran will do in response. The price of crude oil has spiked in recent days. Christian Gilles / NewsWire Credit: News Corp Australia
If it hits neighbouring oilfields or blocks the Strait of Hormuz, through which 20 per cent of the world's oil supplies are shipped, the price of the commodity could skyrocket.
But NRMA spokesman Peter Khoury said every time there were geopolitical tensions in the Middle East, there was an initial knee jerk reaction from the market before it stabilised.
He said Australian motorists should remain calm.
'What we are seeing here is an initial reaction to what has happened in the last few hours in Iran, but this is not uncommon,' he told NewsWire.
'Until you see those increases rise and they start occurring in the Asian markets then Australian motorists shouldn't be panicking.'
Mr Khoury said currently there were no issues that there will be supply issues.
'It is important that it is put into context – we get our oil from Asia, we get our refined fuel from Asia, so there's no need to panic,' he said.
AMP chief economist Shane Oliver wrote in his latest note fuel prices could be on the rise, but it would need the price of oil to remain elevated.
'Oil prices were already rising this month on signs of increasing risks and have spiked further – with the rise so far this month threatening a flow of around 12 cents a litre for Australian petrol prices if sustained at these levels,' he said. Australian motorists could be spared the worst of the fallout. NewsWire / Flavio Brancaleone Credit: News Corp Australia
Swissoquote Bank senior analyst Ipek Ozkardeskaya said the price of oil would either rise or fall depending on Iran's response.
'One scenario is de-escalation, which could bring oil back below $US70 per barrel, around the 200-day moving average, shifting the market's attention back to supply-demand dynamics, trade disruptions, and renewed pressure on Russian oil,' she wrote in an economic note.
'The other scenario is broader escalation, potentially pushing oil prices toward $US90 –$100 per barrel – hopefully only temporarily.'
Dr Oliver said the flow on impacts from this could see inflation spike over the short term.
'While petrol prices could spike on the latest Israel/Iran conflict, the RBA is likely to look through any boost to inflation as temporary and focus more on any drag to growth.'
Despite the rise in costs, Dr Oliver reminded motorists the price of crude oil had just gone back to levels it was this time last year.
He also believes subdued consumer confidence, weak business conditions and easing inflation would all add to a case for a rate cut.
'Following the weak March quarter GDP data our base case is for 0.25 per cent rate cuts in July, August, November and February taking the cash rate to 2.85 per cent.
The money market sees about an 88 per cent chance of a 0.25 per cent cut in July and just over three cuts by year end.
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Speaking through an interpreter in a recent interview with Automotive News, Toyoda-san said Toyota is as committed to reducing the environmental impact of cars as any other brand, but has adopted a cost- and time-effective way to go about reducing its carbon emissions. "When the term 'carbon neutrality' started to become popular and we started to hear about it, we set our target as a company saying that for us, the enemy is carbon," he said. "The way that we thought about it was that we're not going to contribute to achieving carbon neutrality just by building BEVs, but we have to focus on things that we can do now so that, immediately, we can reduce CO2 from the air. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. "We looked at ourselves [and asked] 'what can we do with the things that we have to contribute to carbon neutrality?' 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"That will be similar to thinking as a person of the planet, not just from one perspective, but thinking about the whole planet, and then we can think about the various options and take the movements to reduce CO2 as much as possible. "I believe if everyone can support this way of thinking, it will be for the benefit of all the stakeholders too." MORE: Toyota RAV4, Corolla, Camry, Corolla Cross, Kluger go hybrid-only in AustraliaMORE: 2026 Toyota RAV4 gets fresh design, tech plus PHEV power for AustraliaMORE: Toyota, Mazda and Subaru commit to petrol power with new enginesMORE: Everything Toyota Content originally sourced from: Toyota chairman Akio Toyoda has reinforced his company's commitment to prioritising hybrid vehicles (HEVs) over battery-electric vehicles (EVs or BEVs), outlining that hybrids are its ideal way forward in terms of reducing total CO2 emissions. Speaking through an interpreter in a recent interview with Automotive News, Toyoda-san said Toyota is as committed to reducing the environmental impact of cars as any other brand, but has adopted a cost- and time-effective way to go about reducing its carbon emissions. "When the term 'carbon neutrality' started to become popular and we started to hear about it, we set our target as a company saying that for us, the enemy is carbon," he said. "The way that we thought about it was that we're not going to contribute to achieving carbon neutrality just by building BEVs, but we have to focus on things that we can do now so that, immediately, we can reduce CO2 from the air. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. "We looked at ourselves [and asked] 'what can we do with the things that we have to contribute to carbon neutrality?' That was the base of how we made our decision in those times, and that has not changed now, and will not change for the future." Toyoda-san is referring to the widespread rollout of hybrid vehicles, which dominate the Japanese brand's current model range. Toyota is credited with creating the first mass-produced hybrid car in the late 1990s, and has continued to develop the technology to the market-leading status it holds today. The company's passenger car lineup is now dominated by hybrids, evidenced by the Japanese brand's Australian axing of all petrol versions of cars that offer hybrid options in 2024. Hybrids continue to play a significant role in Toyota's global efforts too, not least in its home country. Toyoda-san claims that over the past five years, the focus on hybrids played a larger role in reducing Japanese CO2 emissions than EVs. Above: Toyota Hybrid range "If you can check the data for each country about the CO2 emission situation for the past five years, it's going to be very clear," Toyoda-san said. "For Japan, we had this weapon of hybrid vehicles, so with the hybrid vehicles, we were able to reduce 23 per cent of CO2 emissions in the same [time], and it was the only country that was able to achieve that." Toyoda-san added that his company has produced and delivered upwards of 27 million hybrids to date, and claimed that figure was "equivalent to nine million BEVs in terms of the contribution to carbon neutrality". "The hybrids that we made and sold had the same impact as nine million BEVs on the road, but if we were to make nine million BEVs in [Japan] it would have actually increased the CO2 emissions, not reduced, because we are relying on thermal powerplants." 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