An expected surge in global oil prices following US and Israeli missile strikes on Iran is set to flow through to Australian petrol pumps, adding significant pressure to household budgets already straining under high inflation and rising interest rates.
Economists warn that the conflict is "bad news" for consumers, who will pay higher prices at the bowser and for oil-exposed goods.
Rystad Energy forecasts oil prices to soar US$20 a barrel, with senior vice president Jorge Leon noting that the halt of traffic through the Strait of Hormuz—carrying about 15 million barrels per day—means "the net impact remains an effective loss of 8-10 million barrels per day of crude oil supply."
AMP chief economist Shane Oliver stated that the "rule of thumb" suggests a US$10 rise in oil prices adds about 10 cents a litre locally, potentially pushing Australian prices sustainably above $2 a litre.
"It is bad news for Australian households.It is a tax on consumer spending," Oliver said.
While Federal Cabinet Secretary Andrew Charlton played down the prospect of further energy bill relief in the May budget, Energy Minister Chris Bowen left the door ajar, stating, "We'll always look at what’s necessary in relation to unfolding developments, but our focus will continue to be on helping Australians with the transition to cheaper energy."
The Reserve Bank of Australia is likely to look through immediate inflationary spikes, but Challenger chief economist Jonathan Kearns warned that if the conflict persists and disrupts shipping, it "increases inflation... [and] constrains [economic] growth."