It looks, at least for now, as though tensions in the Middle East are easing somewhat. It appears much less likely Iran will try to close the Strait of Hormuz, through which flows about a fifth of the world’s oil.
In response, oil prices have dropped to a two-week low below US$70 a barrel.
The economists at the Reserve Bank will be breathing a sigh of relief. A surge in oil prices would have injected more uncertainty into the global outlook. It would have made a decision on whether to cut interest rates in July harder.
