A drawn-out war with Iran is now threatening to push up the price of everything in as instability in the Middle East makes crude oil more expensive.
That will be passed on through increased petrol and diesel prices at service stations, with higher fuel bills forcing up the cost of transporting retail goods, driving up prices.
Now fears are growing the new Middle East crisis will send the cost of living soaring once more and inflict more economic chaos on with rising inflation and interest rates.
Iran is threatening to close the vital trade route through the Strait of Hormuz – a narrow body of water linking the Persian Gulf to the Indian Ocean – after the US attacked its nuclear facilities over the weekend.
A quarter of the world’s oil goes through this channel, and shutting it down would send fuel costs soaring globally, but especially in which imports 90 per cent of its fuel.
U.S. Secretary of State Marco Rubio on Sunday called on China – which has strong trade links with Iran – to encourage Iranian leaders to keep the strait open.
Moomoo market strategist Jessica Amir predicted any blockade by Iran could see crude oil prices soar from just under $US76 a barrel now to more than $US100 a barrel.
‘If Iran retaliates – if China does not stop Iran – then oil prices getting to $100 is very likely,’ she told Daily Mail .
‘That’s a pretty significant increase, and dependent on the Strait of Hormuz being blocked,’
n motorists are now typically paying $1.78 a litre for petrol but could face paying $2.20 a litre or more, similar to 2022 prices when Russia invaded Ukraine.
That would have flow-on effects for the price of goods as transport costs are passed on to consumers.
‘People are going to pay these higher prices for transporting goods around for the things that we eat on a day-to-day basis,’ she said.
‘You would expect the flow-on effect of inflation for the things that you pay in your shopping trolley as well.’
The wholesale price of unleaded petrol last week soared by five per cent from $1.60 a litre in Sydney and Melbourne to $1.68 a litre.
This increase alone would add $4.40 to the bill for a motorist filling up a Toyota RAV4 SUV with a 55-litre tank.
Service stations at Parramatta in Sydney’s west are now selling 95-octane unleaded for $2 a litre, still below the crippling prices of 2022 after Russia launched its offensive against Ukraine.
But the end of that year, ‘s inflation levels soared to a 32-year high of 7.8 per cent, hitting levels last seen in 1990 when Iraq’s invasion of Kuwait led to the first Gulf War.
, however, is more vulnerable to higher petrol prices because of its high fuel imports and conservatively has just 54 days’ of supply stored on-shore.
That is well below the International Energy Agency’s requirement for , and other OECD nations, to hold oil stocks equivalent to 90 days’ worth of net imports.
The nation also has further substantial fuel reserves in the US and would need to be shipped over.
Only two oil refineries still operate in at Lytton in Brisbane and Geelong, west of Melbourne.
The Kwinana refinery in Perth and the Altona one in Melbourne both closed in 2021.
‘s benchmark S&P/ASX200 was 0.9 per cent weaker on Monday.
Jessica Amir added: ‘Higher oil prices are not good for the share market.’