Oil prices could surge to US$150 a barrel.
Australia’s largest bank has warned that global oil prices could surge to US$150 a barrel if disruptions to Middle Eastern supplies worsen.
Commonwealth Bank economists said Brent crude could reach that level in the coming weeks as concerns grow over potential shortages.
The warning follows Saudi Arabia’s decision to keep a major oil pipeline closed for several weeks after attacks by Houthi forces.
The East-West pipeline is an important route for moving Saudi crude to the Red Sea, helping avoid the Strait of Hormuz. Before the current conflict, around 25% of the world’s oil supply passed through the narrow waterway.
CBA said the pipeline closure would force more Saudi oil shipments to travel longer routes through the Suez Canal. This could increase tanker costs and put further pressure on global supplies.
Growing demand from China is also expected to add pressure to oil markets.
The bank estimates global crude inventories could provide only five to 11 weeks of supply under current conditions. It said prices may need to reach around US$150 to trigger a major reduction in demand, particularly across emerging Asian economies.
A similar situation occurred in 2008, when Brent crude reached about US$148 a barrel.
Australian motorists are already feeling the impact. Petrol prices are averaging around $2.20 a litre in capital cities, while diesel is around $2.55.
The NRMA has warned that fuel price volatility could continue while uncertainty remains around the Strait of Hormuz.
NRMA spokesperson Peter Khoury said greater stability in the Middle East and the reopening of the Strait would be critical to reducing pressure on Australian fuel prices.
For Australian households and businesses, a further rise in global oil prices could mean higher fuel and transport costs in the months ahead.
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Source : 9 News
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