In Brief
- Ripple effects of the war in Iran will be felt in Australian's hip pocket.
- Global oil prices have already risen more than 8% since the conflict began on Saturday.
Australians have been warned there could be more cost of living pain as the United States-Israel war on Iran plunges international trade into disarray.
Petrol price rises are expected after oil prices jumped to their highest level in four years — as Iran threatens the Strait of Hormuz, the shipping lane on its southern border through which 20 million barrels of oil flow each day.
Social Services Minister Tanya Plibersek has said "of course" there will be domestic economic fallout from the escalating Middle East conflict.
"There was an economic impact of Russia's invasion of Ukraine that affected the whole world and that includes Australia," Plibersek told Channel Seven's Sunrise program on Monday. "Our global oil and petrol ultimately is impacted by what is being produced in the Middle East."
Rising petrol and diesel prices are expected to have knock-on effects for Australians. It could push up the cost of goods and services as fuel underpins most international and domestic transport.
International shock waves
Sea and air trade routes in the Middle East have been significantly impacted by the conflict in the region.
Air travel across the region has been disrupted, with thousands of flights cancelled and airspace above Iran, Iraq, Israel, Saudi Arabia, Kuwait, and the United Arab Emirates shut.
The Strait of Hormuz, a 33km-wide pinch point through which 20 to 30 per cent of all global oil production travels, is "practically closed", Iranian state media has said. At least three tankers were damaged off the Gulf coast and one seafarer was killed during Iranian retaliatory attacks.
Danish shipping giant Maersk announced on Sunday that it would be halting transport through both the Strait and the Suez Canal bordering Egypt to ensure the "safety of our crews".
They join several international shipping groups avoiding the region as Iran exchanges missile fire with Israel and has launched aerial attacks on neighbouring nations.
Maersk has said it will reroute ships around the Cape of Good Hope, adding thousands of kilometres to trade journeys.
Hapag-Lloyd and the French shipping group CMA CGM have said they will apply a "war risk surcharge" on cargo travelling from large parts of the Middle East and North-Eastern Africa.
What impact will it have at the petrol pump?
The price of Brent crude jumped 8.8 per cent on Monday while US crude climbed by 8 per cent, putting Brent at US$79.34 ($111.67) a barrel and US at US72.38 ($101.87).
NRMA spokesperson Peter Khoury told reporters on Monday he expects prices at the pump to increase by around 10 per cent.
"The message to Australian drivers today is this: Please do not panic, in the first instance. Whatever happens overseas takes about seven to 10 days to flow on here at home," Khoury told reporters in Sydney on Monday.
"So we should not see an impact on the bowser immediately and only then if things are sustained over a period of time and we don't see that jump stabilise and prices come back again."
Already, queues around petrol stations in some locations have been reported as people attempt to fill their vehicles ahead of the anticipated climb.
"The other message we have is to the oil companies: Do not use this as an excuse to jack up your prices and charge Australians more than they should be paying", Khoury said.
"Our hope is that the prices will stabilise, but if things don't de-escalate, then we could see those prices flow onto the Australian market".
US President Donald Trump has suggested the war could go on for four weeks.
"It's always been a four-week process. We figured it will be four weeks or so. It's always been about a four-week process so — as strong as it is, it's a big country, it'll take four weeks — or less," British newspaper The Daily Mail quoted Trump as saying.
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