Middle East conflict drives oil price surge, pressuring Australian fuel security

Fighting between U.S./Israel forces and Iran resumed after a month‑long ceasefire, cutting transits through the Strait of Hormuz to about 12 vessels a day from the pre‑conflict average of 60‑138. The restricted flow of roughly one‑fifth of global oil and a share of LNG exports pushed Brent crude up to around $85 per barrel – a rise of 9‑13 % in two days – and lifted U.S. WTI to similar levels.

In Australia, the spike prompted the government to consider extending the 16‑cent‑per‑litre fuel excise discount beyond its August 2 expiry. Energy Minister Jason Clare warned that “even though there are bombs dropping on the other side of the world it is having an impact on Aussies here and now.” Domestic fuel reserves sit at about 41 days of petrol, 37 days of diesel and 33 days of jet fuel, well below the IEA’s 90‑day benchmark.

The Australian Logistics Council echoed the vulnerability, noting that extra diesel cargoes secured by the government are a short‑term fix, not a lasting solution. ALC CEO Dr Hermione Parsons said, “It has not bought Australia fuel security.”

The oil rally lifted consumer sentiment – the Westpac‑Melbourne Institute index rose 4.1 % to 83.9 in July – and improved NAB business confidence to –5, though both remain in pessimistic territory. The Reserve Bank of Australia faces pressure to consider another rate hike if oil‑driven inflation persists. The U.S. also announced a 20 % fee on vessels transiting the Strait of Hormuz.