The RBA is now twice as likely to hike interest rates as the escalating US-Iran war drives fuel prices higher, putting pressure on Australian households and businesses. The total breakdown in the fragile ceasefire has sent Brent crude surging 23% in two weeks, approaching $US90 a barrel, while global oil reserves dwindle.
Why the RBA may hike rates again
Market forecasts now place a nearly 30% chance of an interest rate rise on 12 August, up from just 16% two weeks ago. This sharp increase reflects the stagflationary pulse the conflict is sending through the Australian economy, with inflation already tracking too high for comfort.
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Fuel prices climb across Australia
Australian motorists are facing higher costs at the pump. Diesel has jumped 40 cents in July to about $2.10 a litre in major east coast cities, while unleaded petrol is up 25 cents to roughly $1.75, partly due to the removal of federal fuel excise relief.
Global oil market at a critical juncture
Analysts warn of a coming tipping point after Iran’s leader declared “full-scale war” with the US and Houthi rebels threatened to blockade Saudi Arabian oil through the Red Sea. Luke Yeaman, CBA’s chief economist, noted that a total lack of trust between warring parties makes it difficult to judge the conflict’s trajectory.
| Fuel Type | Price Increase (July) | Current Price (East Coast) |
|---|---|---|
| Diesel | +40 cents | $2.10/litre |
| Unleaded Petrol | +25 cents | $1.75/litre |
Key takeaways for consumers
- RBA rate hike probability has doubled to nearly 30% for August.
- Fuel prices are rising sharply due to the US-Iran war and reduced global oil reserves.
- Diesel remains most exposed to disruptions, up 40 cents in July.
- Stagflation risks are increasing as inflation stays high and economic growth slows.
- Monitor your budget and consider locking in fixed-rate loans if possible.
FAQ
What is the chance of an RBA rate hike in August?
Markets now place a nearly 30% chance of an interest rate rise on 12 August, up from 16% two weeks ago, driven by the US-Iran war and rising fuel prices.
How much have fuel prices increased in Australia?
Diesel jumped 40 cents to about $2.10/litre, and unleaded petrol rose 25 cents to roughly $1.75/litre in major east coast cities during July.
What is causing the global oil price surge?
The breakdown of the US-Iran ceasefire, Iran’s declaration of “full-scale war,” and Houthi threats to blockade Saudi oil through the Red Sea have sent Brent crude up 23% in two weeks.
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