Australia interest rate rises could accelerate if Donald Trump's renewed conflict with Iran is not resolved within a week, economists warn. Resurgent oil and fuel prices are putting pressure on the Reserve Bank to act.
Oil Prices Surge After US Strikes on Iran
US missile strikes on Iran and a new maritime blockade have lifted Brent crude oil to US$85 a barrel, up from near US$70 in early July. The West Texas Intermediate benchmark also surpassed US$80 a barrel. Vivek Dhar, an energy commodities strategist at Commonwealth Bank, warned that escalating hostilities could rapidly deplete global oil stockpiles.
Find Bleeding Edge Supplements at Scandalous Prices on iHerb.
"The clock has started ticking again on global oil inventory depletion," Dhar said. Continued conflict could push Brent to US$100 a barrel within 10 days and US$150 a barrel within 10 weeks.
Impact on Australian Fuel Prices
Crude prices at US$110 a barrel in April sent Australian unleaded petrol to nearly 260 cents a litre and diesel to nearly 320 cents a litre. Rising oil prices have already pushed wholesale diesel from 177.1 cents a litre to 186 cents a litre, according to the Australian Institute of Petroleum. Service station diesel is back to about 190 cents a litre in major capital cities.
Peter Khoury from the NRMA said markets had accounted for negotiation breakdowns, but fuel would get more expensive if oil prices remain elevated for more than a week. The federal government's fuel excise relief expires on 2 August, adding 16 cents a litre.
Reserve Bank Likely to Raise Rates in August
Matthew Hassan, head of Westpac's macro-forecasting, said resurgent oil prices support the bank's prediction that the Reserve Bank will raise interest rates in August. "It will feed into inflation and consumer spending, making a fourth rate rise this year more likely," he noted.
Comparison of Oil Price Scenarios
| Scenario | Brent Crude Price | Impact on Australian Fuel |
|---|---|---|
| Current (Early July) | ~US$70/barrel | Petrol ~240 cents/L |
| After US Strikes | US$85/barrel | Wholesale diesel 186 cents/L |
| Continued Conflict (10 days) | US$100/barrel | Petrol near 260 cents/L |
| Extended Conflict (10 weeks) | US$150/barrel | Diesel above 320 cents/L |
Key Takeaways for Australian Consumers
- Interest rate rise likely in August if Iran conflict persists
- Fuel prices already climbing, with excise relief ending soon
- Oil above US$85 could trigger further economic pressure
- Households should prepare for higher borrowing costs
FAQ
Will the Reserve Bank definitely raise rates in August?
While not guaranteed, Westpac's macro-forecasting head says resurgent oil prices support the prediction of a rate rise in August. The Iran conflict is a key factor.
How much could fuel prices increase?
If oil reaches US$100/barrel, unleaded petrol could hit 260 cents a litre. Diesel may exceed 320 cents a litre if conflict extends.
When does the fuel excise relief end?
The federal government's fuel excise relief expires on 2 August, adding 16 cents a litre to fuel prices.
Shop premium products at GrandGoldman.com
Browse the Shop
Acacia frida deluxe solid wood bed frame |
Bedroom bench |
Bed chest drawers |
Lingerie dresser |
Frame base |
Mirror with jewelry storage |
30 Bathroom Vanity |
Memory foam queen mattress |
Mattresses for back pain |
Nightstand set of 2 |
Grand Goldman Shop |
Civil Lawyer
Deutschland Trikot WM 2026
