Oil prices fell by more than 4 per cent overnight after major price cuts by leading exporter Saudi Arabia and a spike in OPEC output, offering hope of cost-of-living relief at the bowser for Australians.
The moves helped stabilise market concerns about the escalating geopolitical tensions in the Middle East, and sparking optimism about cheaper petrol prices in Australia.
Brent crude dropped $US2.99 ($AU4.45), or 3.8 per cent, to $US75.77 a barrel on Monday (Tuesday AEDT) while US West Texas Intermediate crude futures fell 4.6 per cent, or $US3.41, to $US70.40 a barrel, reports Reuters.
Last week, both contracts rose by 2 per cent after attacks by Yemen Houthi fighters on ships in the Red Sea.
Australian economic commentator and chief investment officer for Motley Fool, Scott Phillips, told Today this morning the oil price drop offers hope of cheaper petrol prices at the bowser.
“It is a significant fall, the most in ages,” he said.
“The Aussie dollar is holding firm as well. If the Aussie dollar stays firm or rises and oil drops, we should see lower prices at the pump.
“Competition will have to work its way through. Hopefully sooner rather than later.”
There is concern a broadening of the Israel-Hamas conflict into a major Middle East war will damage the world economy.
US Secretary of State Antony Blinken has been continuing his diplomatic tour of the Middle East, trying to convince key Arab leaders of the need not to allow this conflict to spread further.
Meanwhile, world markets are anticipating Thursday’s release of the latest inflation data for American consumers.
A cooldown there has ignited hope on Wall Street that the Federal Reserve will soon see enough improvement to not only halt its hikes to interest rates but begin cutting them.
(9 NEWS)
