It may seem counterintuitive, but, in my view, the chances of a Reserve Bank of Australia (RBA) rate hike next week are fading by the minute.
If the Iran war continues at its current intensity and the Strait of Hormuz remains closed, oil will hit $200 next week, reaching $500 or whatever price is needed to crush 17 percent of global demand.
There will be massive hoarding and panic both domestically and internationally, and due to Australia’s inadequate preparedness, our one-month fuel reserves will run out much faster than planned.
Local petrol will be priced at $5 per litre. On track to double that.
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The entire economy would come to a complete halt, sending Australia into recession, if not depression.
It can get so bad that all petrol is nationalized and prioritized for the distribution of food and other essential products, leading to severe restrictions on the use of personal vehicles and significant changes in transport logistics across the country.
Welcome to your oil lockdown.
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Albo’s idiots don’t understand any of this, yet they all blame One Nation.
It is not known whether the RBA will hike in these circumstances.
In fact, they may have to make emergency cuts, as the unemployment shock is a large part of the oil demand destruction that will be required.
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The Australian bond market continues to absorb the price of oil shock as a result of general inflation.
However, with oil prices at $109 today, we are already approaching demand destruction levels.
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At $200 by the end of the week, if nothing improves, we will be in the early stages of a major recession.
I’m not sure at what oil price the bond market wakes up to the fear that it needs a price for crashing growth rather than rising inflation.
But I can confidently predict that it will happen in the next few days. ceteris paribus
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In short, forget the RBA.
Start worrying about how to feed Australians in a country with no petrol supply.
