Aussie petrol prices: Trump's move in Israel-Iran fight sparks warnings of bowser pain

West Australian

7 hours ago

Australians could be set for renewed pain at the bowser after US President Donald Trump stepped in to the raging conflict between Israel and Iran, with a shock weekend aerial strike.
Mr Trump claimed to have taken out Iran's ability to enrich uranium through a bombing campaign on three key underground facilities.
The Middle Eastern nation has reportedly warned 'all options' are on the table for a response.
That will leave the west's energy security hanging in the balance, as Iran borders the crucial Strait of Hormuz waterway — a 33 kilometre-wide passage which transits about 20 per cent of global oil supply.
Oil prices rallied on Monday morning as the threat of escalation loomed. Brent crude lifted more than 5 per cent to surge past $US80 per barrel.
Share markets rose only modestly, a signal that investors hope for a quick return to peace.
The benchmark ASX200 declined 0.3 per cent to 8,474.5 points at 12:30pm AWST, while Japan's Nikkei225 and futures for the US S&P500 slid a similar amount.
Iran's next move will determine whether the cost of oil gets pushed even higher, according to AMP chief economist Shane Oliver.
A disruption to shipping in the Strait or an Iranian attack on the oil infrastructure of other major Middle Eastern producers would be among the worst risks, Dr Oliver said.
'As 20 per cent of global oil supplies and 25 per cent of LNG trade flows through the Strait, any disruption could push oil prices above $US100 a barrel, possibly to around $US150/bbl,' he said.
'This would likely only be brief, as the US military would likely quickly move to stop Iran.'
Oil reaching $US100/bbl would add 25 cents per litre to the price of petrol for Aussies, Mr Oliver said. That's on top of a 15¢/L increase already in the pipeline following the turmoil of recent weeks.
It will mean cost of living pain returns to the agenda for Australian households, just as inflation looked to be coming under control following a four-year fight.
But the overall impact of rising petrol prices on inflation will be moderated because consumers will need to switch spending from other categories to petrol.
Demand for discretionary goods will fall and there will be less room for price hikes in other sectors of the economy, including services.
Inflation remained under control during oil price breakouts across more than a decade from 2002 to 2014, partly for this reason.
Prices for key Aussie energy export LNG will likely also head higher and ANZ researchers expected a 'meaningful' impact on gas.
'Over 20 per cent of the world's LNG trade would be at risk, namely exports from Qatar,' ANZ researcher Aaron Luk said.
He said shippers would become 'even more cautious' about entering the waterway to pick up cargoes from Qatar, which is the world's third biggest producer.
RBC Capital Markets head of strategy Helima Croft said Iran would struggle to close the Strait but may attack individual tankers.
She said it was too early to know how the country would respond.
'Above all, we would caution against the knee-jerk 'the worst is behind us' hot take at this stage,' Ms Croft said.
'President Trump may indeed have successfully executed an 'escalate to de-escalate' move, but a wider expansion cannot still be ruled out at this juncture.'