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Chapter 1: What is the main topic discussed in this episode?
Music and more. Music and more.
Welcome to Fuelcast. I'm Carrington Clark, and this is your source to stay on top of the numbers behind the ongoing energy crisis. It's Monday, June the 22nd. We're recording mid-morning, so let's have a look at the latest figures. Since we checked in last week, the price of Brent crude has fallen to US$81 a barrel. The national average price of unleaded has dropped to $1.64 per litre.
And the national average price of diesel has also dropped down to $2 per litre. Today, I'm joined by Alan Kohler to dig into the major energy headlines. Good morning, Alan.
Good morning, Carrington.
Okay, Alan, let's try to make sense of where we're at in terms of negotiations between the US and Iran. So they're trying to strike a deal, which will basically kick in after the MOU ends. is supposed to expire after the 60 days. Now, on one hand, we had some talks led by the US Vice President J.D. Vance on the US side, but meeting with Iranian officials in Switzerland.
But the talks seem to go off track because of Donald Trump's interruptions from the sidelines, if you will. He's over in the US now. He went to social media threatening Iran.
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Chapter 2: What are the latest figures on Brent crude and fuel prices?
He also did a series of interviews again, threatened Iran, particularly when it came to the Strait of Hormuz. The Iranians say that the negotiations for now are paused, or they say that they haven't ended. How optimistic are you, Alan, that we will actually be able to reach a deal so that we don't have the return to live fire between Iran and the U.S. ?
Well, look, not very optimistic, to be honest. But look, 60 days in this setup, 60 days is a long time. Anything could happen, really. Trump's threats to recommence bombing and drop bombs on their heads is obviously not very helpful. And Israel's attacks on Lebanon and Hezbollah in Lebanon are obviously not helpful either. So look, who knows what's going to happen.
The thing is that the Memorandum of Understanding didn't mention the Persian Gulf Strait Authority that Iran has created, which is now controlling the Straits of Hormuz. And they have imposed a mandatory insurance. So ships have to take out insurance. on top of their existing insurance, which is like a toll. So basically Iran is behaving like it's running the strait.
The Memorandum of Understanding did mention that there would be discussions between Iran and Oman, which is on the other side of the strait, about managing the strait in future. But as to what that exactly means is impossible to know. I mean, and there's no suggestion at this stage that the Persian Gulf Strait Authority that Iran has set up will somehow disappear.
I mean, I think that what's happened as a result of this war is that Iran has gone from not controlling the Strait of Hormuz to controlling it. That's what's happened.
Yeah, absolutely. And I think one of the other concerns for a lot of watchers of how this is playing out is whether or not other countries who might either have both sides of a particularly important strait or maybe one side of it might be looking at the Iranian example now and might think, well, if it's going to be good enough for Iran, why don't we look at doing something similar in the future?
And, you know, there are multiple very critical straits around the world, Straits of Malacca, for example. which you would think that if a country so chose to do so, they could also take similar action.
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Chapter 3: How are US-Iran negotiations affecting the Strait of Hormuz?
And what does that mean for the global economy? Well, if someone's clipping the ticket, that price has to be borne by somebody. And in the end, it's going to be the consumer. So it may well mean that energy prices are higher in the future. Alan, do we have a good understanding of of whether or not the Strait of Hormuz is currently open.
On one hand, the deal, this MOU was supposed to mean the opening up of the strait, but then Iran said over the weekend that it was closed again. The Americans have rejected that. What's your take?
It's closed, I think. There's no ships going through at the moment, as far as I can tell. I've been looking at live trackers and nothing is passing through at the moment. I mean, I'm not sure what... the US rejecting that means. Yes. One of the American senators got up and said that if Iran continues to sort of close the strait, America will take it over by force.
Well, that's not going to happen. I mean, so I don't think what, you know, America's ideas about sort of somehow stopping Iran controlling it are credible. Iran does control the Strait of Hormuz now and it's decided to exercise that control through this Persian Gulf Strait Authority, which it's doing.
And it seems very clear that part of Donald Trump's concern at the moment is more about how other people, analysts, are assessing the victor in this war. He seems preoccupied with people saying that Iran is in a stronger position, but you can't reject reality. And the truth of the matter is, at this point, Iran does have the power to keep the strait closed.
And America was unable to force it open during the periods where there were live fire. And there seems to be less appetite politically in America to continue a war to try to reopen it. Alan, let's talk about Australian politics because the government has made a decision when it comes to the fuel excise cut. So this was relatively early on in the conflict.
They determined to cut the fuel excise cut. which meant a 32 cent per litre cut to the price people were paying for petrol. It was due to expire at the end of this month. And the government has kind of decided to do almost a literal halfway measure, haven't they? They've decided that there will still be a cut to the usual excise, but it won't be as big as it has been recently.
And it will now be 16 cents per litre. What do you make of that decision? Is it the right one? And what impact do you think it will have for the Australian economy?
Well, it's obviously because the oil price, although it's come down a lot, you know, it's in the mid-70s now, it's still $10 above what it was before the war started. So, you know, there's a sort of a $10 per barrel price premium, you know, on the price of oil as a result of what's happened. So, you know, I think that probably they're stuck. The government's probably stuck.
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