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Australian households brace for higher rates and petrol as crude stays high

Economists warn global crude could remain elevated for at least a year, with markets seeing an even chance the RBA delivers a fourth rate increase on 11 August.

Reported · Written up by our desk · Trade & Tariffs

Australian households are facing the prospect of higher interest rates and petrol prices over the coming weeks, as global crude oil has moved back above $100 a barrel amid an intensifying US-Iran conflict, according to the Guardian Economics.

Financial markets are now pricing an even chance the Reserve Bank of Australia will deliver a fourth cash rate increase at its next meeting on 11 August. Warwick McKibbin, director of the ANU’s Centre for Applied Macroeconomic Analysis, said crude prices are likely to stay elevated for at least a year as the US-Iran war enters a more dangerous phase.

McKibbin pointed to supply constraints including the Houthis’ blockade of Saudi Arabian oil through the Red Sea, and what he described as increasingly successful destruction of Russian energy infrastructure. He added that access to supplies now looks different than it did a few months ago, with reserves run down, particularly in the US.

Domestically, the phasing down of government fuel tax relief to 16 cents per litre and a 37% jump in the international Brent benchmark have pushed unleaded costs to $1.80 a litre, up from about $1.50 earlier in the month, according to Motormouth. Barrenjoey economist Johnathan McMenamin said the combination of higher global prices and the end of the remaining fuel excise discount after 2 August should lift unleaded back above $2 a litre over coming weeks, while diesel is up by about 50 cents in July to around $2.20 in major East Coast cities.

Latest closeWTI crude $92.23 ▲6.2%|Brent $100.54 ▲6.9%

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