Treasurer Jim Chalmers warns Australians of 'perilous' threat to fuel prices over escalating Iran-Israel conflict
Treasurer Jim Chalmers has warned Australians could face a 'perilous' threat to fuel prices as global supply chains are at risk from the heated Iran-Israel conflict.
Crude oil is up more than 10 per cent over the past week since Israel attacked oil facilities in Tehran and the South Pars gas field before the Islamic Republic retaliated.
Concerns have also grown that Iran will block the Strait of Hormuz - the narrow waterway between the Persian Gulf and the Gulf of Oman - which facilitates the transportation of about a fifth of the world's oil.
Mr Chalmers stressed the turmoil in the Middle East could add to stringent price pressures Australians already experience when they visit the bowser in the future.
'It's a perilous moment for the Middle East, but also a perilous moment for the global economy,' he told Sky News.
'The starkest way that we see the impacts of what's happening is with the oil price. Last Friday, the oil price jumped almost 11 per cent.
'This has big implications for the global economy. It has implications for inflation but also for global growth at a time when the global environment was already very uncertain.'
Pressed on whether Australians would see the ramifications of this at the bowser, Mr Chalmers conceded drivers would see 'volatility' with prices.
'It's hard to imagine that any day-to-day movement in markets will be permanent,' the Treasurer said.
'We're seeing mostly volatility in the oil price. We're seeing the gold price shoot up because that's where people invest when times are uncertain.
'What that means for us is the potential of higher petrol prices usually takes a couple of weeks before the international barrel price reaches the bowser price in the suburbs and towns of Australia.'
Mr Chalmers said the government had concerns about the upward pressure on petrol prices if the Israel-Iran conflict were to further deteriorate and impact sea lanes around the Middle East.
He also ruled out making any changes to the fuel excise, a major promise that former opposition leader Peter Dutton took to the recent election.
"We haven't changed our position on the fuel excise," Mr Chalmers said.
"We've already seen a lot of volatility in petrol prices. In some parts of Australia people must have been - 12 months ago, 18 months ago - paying $2.40 at the bowser in lots of places.
"That got down to $1.50, $1 60."
MST Financial senior energy analyst Saul Kavonic on Monday said there were major concerns about how the conflict would escalate.
'The risk here is twofold: One, could we see Israel directly attack Iranian exports, for example, on Kharg Island, which could take one and a half million barrels a day off the market,' Mr Kavonic told Sky News' Business Now.
'But also, could we see Iran target Western oil interests in Gulf States such as Iraq, which could also knock a few million barrels a day off the market.
'Just in that kind of scenario, you could see oil approach $100 a barrel.'
Israel launched Operation Rising Lion early on Friday, targeting key Iranian nuclear and military sites and reportedly killing dozens of people, including top army commanders and atomic scientists.
In the days since, Iran has hit back by launching dozens of rockets and drones at Israel.
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