Will the world slip up on oil again? – after oil prices spike as attacks disrupt Saudi production

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note takes a look at the risk posed to the global and Australian economies from the spike in oil prices. Key points are as follows:

  • Oil prices have risen over the last few days reflecting drone attacks that impact 6% of world oil supply.

  • The choke point for global growth from higher oil prices is normally a doubling in prices. We are a long way from that just yet. Key to watch will be how long the supply disruption lasts, whether there are more attacks and retaliation from Saudi Arabia and the US.

  • A significant spike in Australian petrol prices would pose a further threat to consumer spending and growth in Australia, adding to pressure on the RBA to ease further.

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