Australian motorists are bracing for a surge in petrol prices, anticipated to reach $2.20 per litre. This increase is spurred by the escalating tensions from the Israel-Iran conflict, which has affected global oil prices. Current prices for Brent crude oil hover around USD 73 per barrel, having spiked recently to USD 77, the highest since January, with forecasts suggesting the potential to exceed USD 100 per barrel shortly.
At present, the average price of unleaded petrol in Australia stands at 178.6 cents per litre, and analysts warn this may climb dramatically. Tony Sycamore, a market analyst from IG Australia, indicated that if the conflict persists without resolution, crude oil prices could easily surpass USD 100, which would directly correlate to increased petrol prices at the pump. Notably, each increase of USD 1 in crude oil generally results in a corresponding 1 cent rise in petrol prices for consumers.
Despite Australia not importing oil from Iran, domestic prices remain closely linked to international markets, escalating in tandem with global spikes. Additionally, AMP’s chief economist, Shane Oliver, highlighted a recent 13% surge in oil prices driven by fears of potential supply disruptions due to the ongoing conflict, with a sustained rise predicted to add approximately 12 cents per litre to petrol prices.
While the recent price surge is significant, it remains within the historical range for oil prices, typically fluctuating between USD 70 to 90 throughout 2024. This level is still considerably lower than the heights seen following the Russian invasion of Ukraine in early 2022, which saw prices exceed USD 100 per barrel.
The Reserve Bank of Australia (RBA) is closely monitoring the potential impact of rising petrol prices on inflation. There are concerns that persistent high fuel costs could delay interest rate cuts by the RBA and may prompt central banks globally to adopt a more cautious stance if oil-assisted inflation survives.
Treasurer Jim Chalmers acknowledged the inflationary risk posed by increasing oil prices but does not expect these developments to dictate immediate interest rate decisions. He noted that while a spike in oil prices threatens the inflation outlook, it could also hinder global growth.
Deputy Prime Minister Richard Marles confirmed that Australians would face inevitable higher costs at the petrol station, linking these price increases directly to the ongoing international conflicts affecting supply chains.
In summary, Australian consumers can anticipate rising petrol prices due to international conflict-driven increases in oil prices, with significant implications for inflation and economic policy in the near future.
