Brad Olsen: Infometrics Principal Economist on the 'volatile' state of the oil market

Oil prices have been going through a volatile period over the last couple of weeks, following the recent conflict in the Middle East.

Prices spiked at the end of last week and then dropped as much as 8 percent, according to reports from earlier today.

Infometrics Principal Economist Brad Olsen explains further.

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Episode Transcript

Speaker 1 (00:00):
Now oil prices dropped surprisingly with Iran striking Katar Brad
olsonism for metrics principle economist and with us.

Speaker 2 (00:07):
O Brad good evening.

Speaker 1 (00:09):
Would you have expected them to do the opposite?

Speaker 2 (00:12):
Well, we've sort of been expecting a bit more of
a fulsome response from Iran. So if that had happened,
then yeah, we were expecting oil prices to go higher.
If we saw the straight up our moves being blocked
or similar, you could have seen a much different result.
As it is, over the course of twenty four hours,
we've had the markets go from being still quite worried
about things to now a ceasefire being in operation. Oil

(00:35):
prices have crashed something like fourteen percent since their peak.
We're now under seventy us of barrels. So, you know,
the course of a couple of days, we've gone from
what feels like the brink of World War III to
you know, everything's back to normal.

Speaker 1 (00:48):
So now we've got a cease Well, don't get over excited, Brad, geez,
I mean, it's still Trump running the free world. We've
got a bit of a ceasefire deal here. What's that
going to do to the price of oil?

Speaker 2 (00:59):
So far?

Speaker 3 (01:00):
It really seems to have settled everyone down. The expectation
and the concern, I guess was always that if you
had this wider regional conflict, if you saw the Iranians
that we're going to block the Strait of Hormuz that
has twenty percent of the world's oil going through it,
that would see further spikes in prices. You would have
seen that in New Zealand with potentially three dollars a

(01:20):
eeter of petrol starting to come back. As it is,
things have actually gone back now. Oil prices are now
lower than where they were before the original Israeli strike
on the thirteenth of June, and so everyone seems to
be now looking at things and going, well, there's no
real reason that oil supply should be constrained. There seems
to be no ongoing risk to getting fuel, and so

(01:42):
on that basis, there is sort of no need to
worry quite as much, which is why you've seen the
price is sort of I'm not going to say they've crashed,
but Jesus, it was a pretty big drop over the
last twenty four hours of over ten percent. I mean,
we really have gone from one end of the spectrum
to another in a very short space.

Speaker 1 (01:56):
Now the whiplash is something else, so Brad, thank you
so much. Appreciated. Brad Olson for Metrix Principle Economists.

Speaker 2 (02:01):
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