One thing Aussie motorists should do
Australians are being warned that now is the low point in the petrol cycle and they should fuel up before prices rise in the coming days.
With the price of Brent crude oil hitting a three-month high over the weekend as the Israel-Iran conflict escalates, surpassing $US80 a barrel, motorists are being urged to fill up.
'We will start to see the prices increase, but they are nowhere near as high as other economies have predicted,' NRMA spokesman Peter Khoury said. Aussie motorists are being told that now is a good time to fuel up. NewsWire / John Gass Credit: News Corp Australia
Mr Khoury said while the price of petrol was going up, it was not as much as some motorists feared, with on average drivers likely to pay 8 cents more a litre when fuelling up their car.
'Our regional benchmark – Malaysian Tapis – closed at $77 a barrel and we do expect it to go higher when the markets open tonight,' Mr Khoury said.
'But to put it in perspective, when we saw those really horrible record high prices back when Russia invaded Ukraine, Tapis was trading at $133 a barrel.'
Australia motorists' fuel costs are based on Malaysian Tapis crude oil prices.
While Tapis crude oil prices are influenced by the same factors as US brent crude oil prices, they do not necessarily trade at the same price.
The price of Brent crude oil spiked to $US80 a barrel over the weekend after the US attacked and 'completely obliterated' three nuclear sites in Iran.
Traders were worried about two major potential escalations in the conflict, with either the closure of the Strait of Hormuz or an all-out regional war negatively impacting the price of oil. Cutting off the Strait of Hormuz could increase fuel prices. NewsWire / Luis Enrique Ascui Credit: News Corp Australia
Cutting off the Strait of Hormuz could send the price of oil above $US100 a barrel, as the 32km mile stretch is the primary route of exports from Saudi Arabia, Iraq, the UAE, and Kuwait.
But the passage that feeds the world with about 30 per cent of its oil supply is still open, at least for now, pending a final decision by Iran's Supreme Council after Iran's parliament voted to close it.
Mr Khoury said it was important that Australians educated themselves before they filled up, with motorists in Sydney facing the bottom of the cycle, while Perth prices are set to fall on Tuesday.
'The reason I say that is because there is always a spread of prices,' he said.
'People are really surprised. We've had people say I thought the prices would be sky high and they are not.'
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Australian motorists worried about tensions in the Middle East affecting prices at the pump have been sent a clear message: 'Fill up now.' US President Donald Trump's administration carried out an attack on three nuclear sites in Iran on Saturday. It comes after Israel launched attacks on Iran earlier this month. Oil prices are expected to rise as a result of the escalation in conflict, however experts have spoken out to ease fears of immediate surges. 'It's really important for Australians today to understand that what we have seen again over the weekend, while it is another escalation above and beyond the escalation we saw the weekend before it, this is the Middle East,' NRMA spokesperson Peter Khoury said. 'Unfortunately, flare-ups are all too often and all too common.' The regional benchmark for oil in Australia, Tapis, is expected to increase in price by tonight, Khoury said. 'We don't know by how much,' he said. Based on what we're seeing out of the US, it could be $3 or $4 a barrel.' A possible way for Iran to retaliate against the US and Israel is to close off the Strait of Hormuz. The strait is a vital trade route used to transport 20 per cent of the world's crude oil, or about 20 million barrels per day. The Iranian parliament has backed closing the strait in response to the US attacks, though this must be approved by Iran's national security council. Oil prices could shoot above $100 per barrel if the strait is closed for a prolonged period, according to Goldman Sachs and consulting firm Rapidan Energy. JPMorgan analysts view the risk of Iran closing Hormuz as low because the US would view such a move as a declaration of war. US Secretary of State Marco Rubio on Sunday called on China to help prevent Iran from closing the strait. Rubio said it would be 'economic suicide' for Iran to close the strait because the Islamic Republic's oil exports also pass through the waterway. Currently, it remains open. Khoury said this is 'the most important thing'. 'We do not want Australians panicking,' he said. 'Yes, there is speculation about what could happen in the next days and weeks, but it is the Middle East and anything can happen. 'The other important thing for Australians to know tonight is that if you live in Sydney, Brisbane, Melbourne, Adelaide or Perth, fill up now.' A combination of prices being at or near the bottom of the cycle and turmoil in the Middle East mean now is the time to buy. 'Prices are either in the high $1.60s or in the low $1.70s,' Khoury said. 'That has everything to do with the domestic price cycles in those capital cities. 'The wholesale price in Australia has gone up about eight cents a litre since two Fridays ago when the escalation really flared up between Israel and Iran. 'It will go up again, is the expectation, based on the US decision to attack Iran over the weekend. 'But it's only gone up eight cents a litre in the last week and a bit. 'There's a lot of speculation about what could happen. It's really important that Australians focus on what is happening. 'And what is happening if you live in those bigger cities is that prices are pretty good.' NRMA spokesperson Peter Khoury has urged Australian motorists not to panic, but to fill up now for the cheapest petrol prices. Credit: 7NEWS Khoury advised motorists to check fuel prices near them and find the best deal. 'You can find some real bargains,' he said. 'On any given day, there can be huge gaps in the price of the cheapest service station and the price of the most expensive. 'In Sydney today, it's 70 cents a litre. 'Regardless of what's going on in the Middle East or anywhere else, and regardless of where we are in the price cycle, do your research, use the information that you have access to that motorists in other countries don't have. 'We fought hard to get that made public. It's there for you to use.' When asked when the conflict overseas will affect local prices, Khoury said it normally takes about seven to 10 days. Our service stations are yet to buy the more expensive barrels but when that happens, it will have a flow on effect. 'The NRMA will be monitoring those prices really carefully over the next days and weeks, because what we won't tolerate, obviously, is oil companies manipulating what's going on overseas to put their prices up any higher than they should go,' he said. Khoury also emphasised that even if the strait is closed, it would not create a similar crisis to those caused by other recent global conflicts. 'In 2022, Russia invaded Ukraine, Russia being the second-largest producer of oil,' he said. 'That created an initial shock.' 'Obviously, the world was going to enforce sanctions, and they did. That created an even bigger shock. 'At the same time that that happened, the COVID supply crisis that affected the whole world hit its peak. So we all came out of COVID lockdown at the same time. 'The whole world came out of lockdown at the same time. Demand for oil spiked. Supply could not keep up. So we had probably the worst supply issue or challenge in our lifetime. 'And then Russia invaded Ukraine. 'All of those things had to happen at the same time for Tapis, our regional oil price, to hit $133 a barrel. 'It's currently at $76 a barrel. 'So to get back to those record high prices that we saw back in 2022, you would need a catastrophe at that level to affect global supply. 'We're not there yet, clearly, based on oil prices and the wholesale price. 'And I think that's what we want Australians to focus on tonight.' -With NBC
