Petrol is unlikely to spike despite increased Middle East tension
The conflict between Israel and Iran shouldn't cause a significant rise in fuel prices locally, according to the AA.
Petrol at the pumps had already been purchased at a lower price, said AA principal policy advisor Terry Collins. And so far the markets had managed the risk.
He continued: 'Iran produces about five per cent of the world's oil. Even though it's under sanctions, it still supplies the market. The Israelis have hit only some of the oil and gas infrastructure.
More important, though, was the location of Iran next to the Strait of Hormuz, Collins said.
'About 21 per cent of the world's oil…flows through there. It's just a worry that the Iranians will try to block that strait and therefore restrict oil supplies to the international market.
Collins said the price jumped almost immediately after the conflict began, to about US$75 a barrel but had since dropped back down to under US$73.
'There's plenty of oil around,' he said. 'That's one of the myths – that there's not. It's just how they supply it.'
Collins said that for every dollar the price of a barrel of oil changed, it's reflected by about a 1 cent change at the pump price here.
He added: 'What we've got in our tanks today was purchased back at the beginning of May, when the prices were below US$60'.
'We know the supply chain is going to take a little bit of a hit but we shouldn't be seeing big jumps in prices domestically.
'And it's only really gone up about 10 cents per litre.
'If it stays at that sustained level, we may see those prices come through in another month.
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