In brief
- The Houthis have launched a naval blockade on Saudi Arabia, which has diverted millions of barrels of oil each day.
- NRMA says prices of fuel are set to rise again.
United States missiles have struck targets across Iran and President Donald Trump has vowed "major military punishment" for Iran and its Houthi allies in Yemen.
While he has, again, left open the door to a diplomatic deal with Iran, the continued combat would mean Australians should brace for another round of price rises at the bowser.
Two weeks after the collapse of an interim truce meant to end the war, the Iranian armed forces responded by firing at US bases in neighbouring Arab countries overnight and warned people there they could strike non-military buildings used by US personnel.
Trump has in recent days threatened to expand the targets being struck in Iran to include energy plants and bridges, to send ground forces to seize its Kharg Island oil hub and to bomb a deep-underground nuclear-linked site known as Pickaxe Mountain.
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On Saturday, he said he had not yet made a decision for new major strike
"We are talking to them. I think they're being serious. I think ... they are being by far the most serious that we've seen them, but that doesn't mean we get there," Trump told reporters at the White House.
Asked what is the exit strategy for the Iran war, he said: "There's a military exit where we just keep going just the way we are, and we can even make it a heavier dose, and it's knocking out everything they have. Or there's a smarter strategy that you make a deal."
But he added: "We're locked and loaded. We're ready to go."
'They haven't received enough pain yet'
The entrance to the Gulf has so far been the focus of a war that has killed thousands of people in almost five months, stoked global inflation and fanned fears of an economic downturn.
The Houthis, who control northern and western Yemen, have announced a naval blockade on Saudi Arabia, which has diverted millions of barrels of oil each day by pipeline to the Red Sea to skirt Iran's near-total blockade of the Strait of Hormuz.
After the Houthis said they had struck two Saudi tankers on Thursday, Trump said he would hold Iran accountable for any further attacks by the fighters.
On Saturday, several strikes hit Yemen's Hodeidah port, eyewitnesses said. The Saudi-led coalition in Yemen said it carried out a "proportionate military response operation" that targeted Houthi military sites in Hodeidah governorate.
The US military launched air strikes on Iran for a 13th consecutive night of attacks, prompting Iran to fire at neighbouring Arab countries that host US bases.
In a statement carried by Iran's Fars news agency, the Revolutionary Guards warned the populations of Gulf countries of potential strikes against US military personnel who may be using "buildings in cities as locations to direct their crimes".
Trump told Axios on Thursday he was considering relaunching major combat against Iran.
"They haven't received enough pain yet," the US news outlet quoted him as saying.
In a statement on X, the Iranian health ministry said 59 people had been killed and 666 wounded since the resumption of clashes with US forces in late June.
Iranian media cited the head of Iran's top joint military command as saying Iran would kill a member of the US forces for every Iranian killed. The war has killed 18 US service members.
The Pentagon said on Monday 100 service members had been injured since 7 July and 96 per cent have returned to duty. Officials have told Reuters that more than 500 US troops have been injured so far.
The Houthi attacks forced several other tankers to turn around and head north through the Suez Canal, potentially using a much longer route to reach Asia by sailing around Africa. Shipping insurance costs through the southern Red Sea doubled for some companies, sources said.
Petrol price hikes not over
Meanwhile, higher prices at the bowser will continue to flow to motorists as the war on Iran drags on and the federal government's temporary cut to fuel taxes winds up.
The scaled-back extension of the fuel excise reduction of 16 cents per litre for petrol and diesel will apply until 2 August.
It is unlikely the discount will be extended.
The intensifying conflict had caused petrol prices to jump in Australia by three cents overnight, with the average for unleaded $1.85, NRMA spokesman Peter Khoury said. Diesel had also jumped by up to five cents, with the average cost $2.26.
"We're seeing prices start to head north, and wholesale prices have also gone up," he said.
"That's going up about 10 cents this week, so those increases are likely to flow on."
Khoury said the government had secured Australia's fuel supply, but that would not impact the high prices motorists were likely to face.
"Unfortunately, until the war ends in the Middle East and they have reopened the Strait of Hormuz, price is going to continue to be volatile," he said.
With so much of Australian industry - including mining, agriculture and transport - run on diesel, the broader economic impact would be "extensive", Khoury added.
Australia sources most of its imported fuel from regional Asian markets, which prompted Prime Minister Anthony Albanese to travel earlier this year to key partners such as Singapore to shore up the nation's supply.
The government has continued to review its policy settings to help manage hip pocket pain for motorists, Treasurer Jim Chalmers said.
"We extended our cut to the fuel tax for another month to help take the sting out of petrol prices for Australian motorists and businesses," Chalmers said.
"This extra month of fuel tax discount is helping Australian motorists and businesses with the cost of living as this support tapers off."
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