Israel-Iran conflict could see Aussie motorists paying $2 a litre for petrol again
Australian motorists could soon be paying $2 a litre for unleaded petrol again as an escalation of the conflict between Israel and Iran revives a cost-of-living nightmare.
Crude oil prices spiked over the weekend after Israel bombed Iran 's nuclear facilities, leading to Iran firing drones back at Israel.
Before Israeli Prime Minister Benjamin Netanyahu ordered the attacks, Australia's average unleaded petrol price stood at $1.81 a litre.
But Australian petrol prices could climb above $2 a litre again should crude oil prices climb to $US95 a barrel for the first time in three years.
Crude oil prices soared by seven per cent on Friday to a five-month high of $US76.94.
Moomoo market strategist Jessica Amir said financial markets were now betting on crude oil prices soaring to levels last seen in mid-2022, shortly after Russia 's Ukraine invasion sparked sanctions.
'While investors will question how long this could go on, and if the conflict will block the Strait of Hormuz, cutting off 21 per cent of the world's oil supply, we're seeing some investors betting (via options) the oil price will rise to US$95,' she said.
'This would cause inflation to spike.'
The last time crude oil prices were at this level, in 2022, Australian motorists were paying more than $2 a litre for petrol, even after excise had been halved for six months by the previous Coalition government.
A spike to $2 a litre would push up average fuel bills by another $10.
Even if the conflict is contained, AMP chief economist Shane Oliver predicted a conservative 12 cents a litre increase in fuel prices.
This would take average unleaded prices to $1.93 a litre and see a driver filling up a Toyota RAV4 SUV pay an extra $6.60 at the bowser filling up a 55-litre tank.
'What happens in the very near term will depend on how Iran retaliates,' Dr Oliver said.
'It has already fired drones and missiles at Israel, but the main risk would be if it attacks US bases in the region (which is possible but likely to be limited) and neighbouring oil producers (which is unlikely) or if it disrupts/blocks the Strait of Hormuz through which roughly 20 per cent of global oil consumption and 25 per cent of global LNG trade flows daily (which is possible).'
Unleaded petrol is now selling for more than $1.90 a litre across Sydney but not yet in Melbourne, MotorMouth data showed.
Even before Friday's Israeli-led attacks, Australian Institute of Petroleum data showed average national unleaded petrol prices had already risen from $1.76 a litre at the start of June to $1.81 a litre.
Fuel prices, however, are still below the $2.20 level of March 2022, after Russia's Ukraine invasion had sparked a series of sanctions.
The West Texas Intermediate price of crude oil has surged seven per cent to a five-month high of $US76.94 since Israel's bombing campaigned started on Friday.
Commonwealth Bank senior economist Belinda Allen said investors were worried.
'Global oil prices jumped on Friday and settled seven per cent higher as Israel and Iran traded air strikes, feeding investor worries that the combat could widely disrupt oil exports from the Middle East,' she said.
But crude oil had already been rising after Iran signalled it would be unwilling to give up its nuclear enrichment ambitions.
While Israel has attacked Iran oil refineries, Dr Oliver said crude oil price rises could be contained unless Iran closed the Strait of Hormuz 'which poses the biggest upside risk to oil prices'.
Prime Minister Anthony Albanese won a landslide re-election victory even after declining to match former Opposition Leader Peter Dutton's plan to halve fuel excise for a year from 50.8 to 25.4 cents a litre, which would have saved motorists $14 a week filling up a RAV4.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Sky News
15 minutes ago
- Sky News
Israel-Iran live: Eight killed in Israel as Iran breaches Iron Dome; Tehran preparing to leave key nuclear treaty
Explained: What is Israel's Iron Dome? Israel's Iron Dome defence system was penetrated overnight as Iran launched renewed airstrikes, with at least eight people killed and nearly 300 injured. Iran's Revolutionary Guards claimed to have used a new attack method that caused the multi-layered defence system to target itself. "The initiatives and capabilities used in this operation, despite the comprehensive support of the United States and Western powers and the possession of the most up-to-date and newest defence technology, led to the successful and maximum hitting of the missiles on the targets in the occupied territories," it said. But what is the Iron Dome and how does it work? The Iron Dome is Israel's highly prized air defence system. It uses radar to detect and intercept aerial attacks targeting the country. Mobile launchers and 'battle management centres' It was developed by Israel's state-owned Rafael Advanced Defence Systems with US support. It consists of a series of truck-towed mobile units placed throughout the country. When their radars detect a threat, the information is sent to a "battle management centre" where military personnel analyse it, anticipating its path and impact point, and decide which missile launcher to use to intercept it. Counter missiles are then fired directly at the threat - or near it - so the shrapnel can neutralise it. The dome, known as Kippat Barzel in Hebrew, reacts within a matter of seconds and is manned 24 hours a day. Originally, it was designed to protect cities and strategic sites against missiles with a range of 2.5 to 43 miles, but it is thought to have been expanded. More than 90% effective It has blocked more than 90% of rockets fired towards Israel, with a naval version deployed to protect ships and other assets in 2017. This is at least partly why the number of Israeli deaths in the current fighting with Iran and Hamas has remained relatively low. Soon after it began operating, it became the envy of other militaries. Rafael says it has supplied at least two Iron Dome batteries to the US army, with Ukraine having made a similar request. Saturation point unknown Although extremely effective, it is not perfect. Overnight, a number of cities in Israel were hit by Iranian strikes, leading to several deaths, with more people trapped under the rubble. The dome also has a saturation point at which it would become overwhelmed, but this level is unknown. When fighting between Hamas and Israel broke out on 7 October 2023, 3,000 rockets were fired from Gaza at once. Israel also has medium and long-range defence systems, known as David's Sling, Patriot and Arrow.
The Independent
16 minutes ago
- The Independent
Nuclear agency head warns of radiological and chemical contamination inside Iran's main nuclear site
The head of the International Atomic Energy Agency said Monday that there is a possibility of both radiological and chemical contamination within Iran's main nuclear enrichment facility in Natanz following Israeli strikes, although radiation levels outside the complex are presently normal. IAEA director general Rafael Mariano Grossi said that the radiation poses a significant danger if uranium is inhaled or ingested. He added that the risk can be effectively managed with appropriate protective measures, such as using respiratory protection devices while inside the facilities. 'The level of radioactivity outside the Natanz site has remained unchanged and at normal levels, indicating no external radiological impact to the population or the environment from this event,' Grossi said. Grossi was addressing an urgent session of the U.N. nuclear watchdog board in Vienna that was convened at the request of Russia to discuss Israeli attacks against Iranian nuclear facilities. He said there apparently was no additional damage at Natanz and the Isfahan nuclear research site since Saturday. He said that the main concern inside the Natanz facility is the chemical toxicity of a gas called uranium hexafluoride, which is the result of fluorine mixed with the uranium during enrichment. It is extremely volatile, will quickly corrode, can burn the skin and is especially deadly if inhaled, experts say. 'Amid theses challenging and complex circumstances, it is crucial that the IAEA receives timely and regular technical information about the facilities and their respective sites,' Grossi said. Without information, the U.N. nuclear watchdog 'cannot accurately assess the radiological conditions and potential impacts on the population and the environment and cannot provide the necessary assistance.' Grossi said that U.N. inspectors will remain present in Iran and inspect the nuclear facilities 'as soon as safety conditions allow.' He warned that 'military escalation threatens lives, increases the chance of a radiological release with serious consequences for people and the environment and delays indispensable work towards a diplomatic solution for the long-term assurance that Iran does not acquire a nuclear weapon.' Satellite photos analyzed by The Associated Press show extensive damage at Iran's main nuclear enrichment facility in Natanz. The images captured Saturday by Planet Labs PBC show multiple buildings damaged or destroyed. The structures hit include buildings identified by experts as supplying power to the facility. Grossi told the U.N. Security Council on Friday that the above-ground section of the Natanz facility was destroyed. The main centrifuge facility underground did not appear to be hit, but the loss of power could have damaged infrastructure there, he said. Israel also struck a nuclear research facility in Isfahan. The IAEA said four critical buildings were damaged, including an uranium-conversion facility, but there was no sign of increased radiation at Natanz or Isfahan. Grossi on Monday also told the IAEA board of governors that no damage has been seen at the site of the Fordo enrichment site, which is buried under a mountain and protected by anti-aircraft batteries. Fordo appears designed to withstand airstrikes. Grossi also said that the Bushehr nuclear power plant, Iran's only commercial nuclear power plant, has not been targeted nor affected by the recent attacks and neither has the Tehran Research Reactor. Any country on the 35-member board of the IAEA can call a meeting under its rules. The IAEA board last week found Iran in non-compliance with its nuclear obligations for the first time in 20 year. —- The Associated Press receives support for nuclear security coverage from the Carnegie Corporation of New York and Outrider Foundation. The AP is solely responsible for all content. —- Additional AP coverage of the nuclear landscape:
BBC News
24 minutes ago
- BBC News
"We need to keep hitting them": Israelis in city struck by Iran back offensive
Bat Yam, just south of Tel Aviv, has long been a stronghold of support for Israel's right-wing governing coalition. In the early hours of Sunday morning, an Iranian missile struck a 10-storey block of flats there, killing at least eight people and trapping dozens more under thick layers of the severe damage, locals here strongly back Israel's attack on Iran, which began on Friday and has targeted nuclear facilities, missile sites, air defences, an airport and other infrastructure as well as nuclear and military personnel. "It needed to be done," says Veronica Osipchik, 33, who lives about 200m (321ft) from the strike site. "But we didn't expect it to affect us like this."Ms Osipchik had the windows and shutters of her apartment completely blown through. Almost every building in the vicinity suffered similar damage."We were in shock," she said, sat on a camping chair alongside a suitcase packed with food and toiletries. The ballistic missiles that caused the damage in Bat Yam are far more powerful than the rockets fired by Hamas and Hezbollah over the past year and half. Those are mostly intercepted by Israel's sophisticated air defence first of those trapped under rubble were pulled out within hours. As of late Sunday, at least three people remained unaccounted for. "I saw fear in their eyes," said rescue paramedic Ori Lazarovich. "People came out all grey, covered in soot and ash and debris."Avi, a 68-year old who did not want to give his surname, was born and raised in Bat Yam. "We need to keep hitting [Iran]" he says. "Of course we have to keep going. Otherwise, they'll drop an atomic bomb on us.""They're weak. We're much stronger," he adds. "Israel is number one in the world."Emil Mahmudov, 18, agreed: "We should have done this sooner. That's what most Israelis think." Israel's justification for its attack on Iran is to stop its nuclear programme. For well over a decade, successive governments have sounded alarm about the Iranian regime gaining nuclear weapons - something Iran denies as Netanyahu has come under fire within Israel for the state of the war in Gaza, his chief political rivals - Benny Gantz, Avigdor Lieberman and Yair Lapid - have all expressed support for attacking Iran. Professor Yossi Mekelberg, of the Middle East Programme at Chatham House, says there has "always been support to stop Iran from acquiring nuclear military capabilities".But, he says, "this is much bigger than fighting Hamas in Gaza, even Hezbollah in Lebanon, or a very limited direct confrontation with Iran.""This is evolving into a full-blown war. And there is fatigue in Israel after 20 months of war.""If there are more casualties, if people are spending a long time in shelters, and if it becomes, again, another never-ending war," then support, he says, could mid-afternoon on Sunday, Israel's far-right national security minister Itamar Ben Gvir - who was recently sanctioned by the UK government for "inciting violence against Palestinians" - arrived in Bat Yam to meet by a cohort of armed security personnel, he shook hands with shop owners along a street where many had their windows blown through by the shock of the blast. One, who did not want to give his name, was sat on a plastic chair outside his bakery, which he'd run for 29 years. He said he was there to prevent he support opening a new front against Iran? "Of course," he says, waving his hands. "What kind of question is that?"Netanyahu also visited Bat Yam on Sunday, to chants of "Bibi, King of Israel" - a play on a popular song about the Biblical warrior King David that many Jewish children learn in later, in an evening address, he mourned the dead, telling the nation: "This is a difficult day. I told you, there will be difficult days."Even with broad support for the conflict, if it continues to escalate - and civilian deaths continue to rise - there will be a question over how many difficult days the Israeli public will tolerate.
