Australia Petrol Prices Today: Oil Surges Past US$116 as Hormuz Attacks Threaten Fresh Pain at the Bowser

SYDNEY — Australian drivers who have seen a brief easing in petrol prices may soon face renewed pressure. Global oil prices jumped to their highest level in about six months as attacks on shipping in the Strait of Hormuz hit a record.

Brent crude, the international benchmark that drives Australian fuel costs, settled near US$117 a barrel on Friday, up more than 3% on the day. That was about 17% higher than a month ago and roughly 75% above a year earlier.

The surge followed reports that attacks on commercial ships in the Strait of Hormuz reached a record in October, according to the Washington Institute for Near East Policy. Iranian state media claimed several more tankers were hit overnight Thursday.

Pump prices easing, for now

The latest jump in crude comes as retail prices had begun to ease.

The Australian Competition and Consumer Commission said in its weekly fuel monitoring report on Friday that "over the last week, average retail petrol and diesel prices decreased in capital cities and across regional locations." It was the commission's 33rd weekly report since the Middle East conflict began in late February.

In Sydney, the NRMA reported on Monday that regular unleaded averaged 239.8 cents a litre, up 87.6 cents since June 30. Diesel averaged 280.1 cents a litre, down 1.6 cents for the week but up 103.8 cents since June 30.

The motoring group said wholesale unleaded prices in Sydney fell 12.1 cents over the week. It forecast pump prices would ease to the mid-230s.

The ABC reported this week that petrol was averaging about $2.42 a litre.

Because Australian pump prices typically lag movements in global oil and refined fuel markets by one to two weeks, Friday's spike in crude could reverse the recent relief.

Pump prices also tend to fall more slowly than they rise, a pattern often described as "rockets and feathers."

Inflation and interest rates

Fuel has become a major driver of Australia's inflation problem. Annual headline inflation rose to 4.0% in the 12 months to August, up from 3.5% in July, according to the Australian Bureau of Statistics. Automotive fuel prices jumped 14.8% in August. The bureau tied the rise to higher world oil prices and the end of federal fuel excise relief.

The Reserve Bank of Australia raised its cash rate by a quarter point to 4.60% in late September, its highest level since 2011.

"Inflation in Australia is broadbased, persistent and well above the 2-3 per cent target band," said Stephen Smith of Deloitte Access Economics.

Russel Chesler of VanEck said: "A December rate hike in our view is becoming increasingly more likely to occur given today's CPI results."

Harry McAuley of Oxford Economics was more cautious. "On balance we don't expect another hike until after the Christmas break," he said, though he flagged oil above US$100 as a risk.

Higher oil prices could add to that pressure. Economists have warned that sustained crude above US$110 threatens a fresh inflation shock.

Supply concerns

Australia's fuel security has come under scrutiny during the crisis. The country holds about 41 days of petrol and 33 days of diesel supply, below the International Energy Agency's 90-day requirement, the ABC reported.

Some service stations ran short of fuel in March and April when supplies tightened. E10 was among the first fuels to disappear from pumps, said Matt Hobbs, chief executive of the Biofuel Producers Alliance.

Hobbs criticized the export of Australian-made biofuels during the shortage. More than 60 megalitres were shipped overseas in the first half of the year.

"At a time of a fuel crisis, we ignored fuel that we made here and instead sent it to other countries," Hobbs said. "Fuel made in Australia should be used in Australia, and not shipped overseas."

The federal government is consulting on a possible mandate requiring fuel companies to buy low-carbon liquid fuels, including biofuels, starting in 2029.

The Australian Institute of Petroleum, which represents Ampol, BP, Mobil and Viva Energy, has defended the industry. "Fuel suppliers have robust international supply chains," chief executive Malcolm Roberts said.

The ABC also reported that the United States is considering a diesel export ban, which could further strain supply.

No quick relief

The federal government has ruled out another immediate cut to fuel excise.

The NRMA has said lasting relief depends on events far from Australia. Spokesman Peter Khoury said earlier this year that what would ease prices is "an end to all the chaos; that is the Strait reopening."

For now, that appears unlikely. Iran has said the strait will remain closed until its conditions are met, and the United States is sending more warships to the region. Analysts say Australian motorists should brace for further volatility in the weeks ahead.