Iranian Attack Doesn't Surprise Oil Market, But the Government May Still Affect Fuel Prices
The weekend's Iranian drone attack has not yet caused significant turmoil in either commodity or financial markets, according to Zoltán Török, Head Analyst at Raiffeisen Bank, during the latest episode of the "Bruttó" macroeconomic podcast series.
In discussing Middle Eastern events, Török mentioned that markets had already anticipated Iran's response following the bombing of the Iranian consulate, indicating that the Persian state would not leave the Israeli action unanswered. He suggests that even if the government does intervene in some way in fuel prices, it is unlikely to revert to price controls, hinting, "The government may not step into the same river twice."
Financial markets were not taken aback by the Iranian drone attack, which had been priced in following previous incidents last week. Zoltán Török, leading analyst at Raiffeisen Bank, shared insights in the new episode of the economic podcast, "Bruttó." Over the weekend, Iran, one of the world's largest oil exporters, launched more than 300 drones and missiles at Israel, exacerbating tensions in the Middle East a concerning development given the oil market's dependence on Tehran's stability.
The incidents were triggered when Israel bombed the Syrian consulate in Damascus on April 1st, killing several officers of the Iranian Revolutionary Guard. Iran vowed retaliation in response.
"As the weekend approached, the likelihood of a retaliatory response was almost certain," said the economist, who noted that Iran had previously signaled its intent to respond, a promise that was fulfilled. Israeli and allied forces intercepted 99% of the drones and missiles, with Benjamin Netanyahu promptly declaring victory. The next move is Israel's response to Iran's action.
"There's a saying in financial markets: act first on rumors, then relax once the news is out," Török explained, suggesting a similar situation might unfold. While various developments could still occur, if the Middle East situation does not escalate, oil prices are expected to remain around the current level of $90 per barrel, influenced as much by weak demand as by the interests of OPEC oil-exporting nations.
The question remains whether the government will intervene in domestic fuel prices, which have spiked in recent months. In an interview with Világgazdaság, after meeting with MOL representatives, Márton Nagy, the Minister of National Economy, expressed the government's growing impatience with fuel prices, which have slipped 7-9% compared to regional averages. The government is awaiting this Friday's regional price data from the Central Statistical Office before deciding whether to intervene in the fuel market. Török believes the reintroduction of price controls is not out of the question, although following supply disruptions in December 2022, it's unlikely the government will make the same move again.
He anticipates that direct price controls will not be the most effective solution for keeping prices in check. Török also mentioned that this week's growth expectations were adjusted to reality, downgrading from 4% to 2.5%. The recovery in growth will likely rely on domestic consumption and demand revival, posing a risk to inflation and potentially leading to a slightly higher consumer price index in the latter half of the year.
Financial markets were not taken aback by the Iranian drone attack, which had been priced in following previous incidents last week. Zoltán Török, leading analyst at Raiffeisen Bank, shared insights in the new episode of the economic podcast, "Bruttó." Over the weekend, Iran, one of the world's largest oil exporters, launched more than 300 drones and missiles at Israel, exacerbating tensions in the Middle East a concerning development given the oil market's dependence on Tehran's stability.
The incidents were triggered when Israel bombed the Syrian consulate in Damascus on April 1st, killing several officers of the Iranian Revolutionary Guard. Iran vowed retaliation in response.
"As the weekend approached, the likelihood of a retaliatory response was almost certain," said the economist, who noted that Iran had previously signaled its intent to respond, a promise that was fulfilled. Israeli and allied forces intercepted 99% of the drones and missiles, with Benjamin Netanyahu promptly declaring victory. The next move is Israel's response to Iran's action.
"There's a saying in financial markets: act first on rumors, then relax once the news is out," Török explained, suggesting a similar situation might unfold. While various developments could still occur, if the Middle East situation does not escalate, oil prices are expected to remain around the current level of $90 per barrel, influenced as much by weak demand as by the interests of OPEC oil-exporting nations.
The question remains whether the government will intervene in domestic fuel prices, which have spiked in recent months. In an interview with Világgazdaság, after meeting with MOL representatives, Márton Nagy, the Minister of National Economy, expressed the government's growing impatience with fuel prices, which have slipped 7-9% compared to regional averages. The government is awaiting this Friday's regional price data from the Central Statistical Office before deciding whether to intervene in the fuel market. Török believes the reintroduction of price controls is not out of the question, although following supply disruptions in December 2022, it's unlikely the government will make the same move again.
He anticipates that direct price controls will not be the most effective solution for keeping prices in check. Török also mentioned that this week's growth expectations were adjusted to reality, downgrading from 4% to 2.5%. The recovery in growth will likely rely on domestic consumption and demand revival, posing a risk to inflation and potentially leading to a slightly higher consumer price index in the latter half of the year.
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Translated by AI
