NRMA and ACAPMA both expect only ‘small’ impacts on petrol and diesel prices in Australia. Photo: Michelle Kroll.
Amid fears that petrol prices could be about to skyrocket in Australia due to the escalating conflict in the Middle East, there may be some good news, starting with the fact that Iran supplies only about 4 per cent of the world’s oil.
This has given experts confidence that impacts on Australia’s petrol and diesel prices will remain minimal over the coming days and weeks.
“If the conflict remains constrained to Iran, then the impact on global prices is likely to be small,” Mark McKenzie from the Australasian Convenience and Petroleum Marketers Association (ACAPMA), Australia’s peak fuel body, told Region today (17 June).
Oil prices jumped last week – up about 7 per cent to US$78 per barrel – in the wake of Israel’s attack on Iran, and immediately fears followed that it could surge to over US$100 by the end of the year and push Australia’s national average price for unleaded petrol to $2.20.
However, when trading opened for the week yesterday (16 June), the figures had returned almost to their previous level – US$73 per barrel.
This is also lower than the same time last year, when it was US$86 per barrel.
Mr McKenzie said it’s nothing like what happened immediately after Russia invaded Ukraine in late February 2022, when the price per barrel skyrocketed to US$128 and we were hit with $2-plus-per-litre at the bowser. Russia’s contribution to the world’s oil supply is almost triple that of Iran’s (about 11 per cent).
“Basically, the oil markets appear to have taken the escalation in their stride for now, while watching for any risk of a broader escalation across the Middle East region,” Mr McKenzie said.
All up, the Middle East accounts for 36 per cent of the world’s oil supply, most from Saudi Arabia (11 per cent of the world’s oil supply, about the same as Russia).
Israel has already hit several oil fields in Iran – and threatened to take out more – but even in the uncertainty of what may come next, Mr McKenzie doesn’t expect any spikes.
“The global situation is one where we are supply-heavy, so price speculation is likely to be low unless there is a very significant escalation.”
Canberra’s current average price per litre for regular unleaded petrol is $1.74, according to PetrolSpy. Photo: Michelle Kroll.
The National Roads and Motorists Association (NRMA) feels equally comfortable about the situation.
“Our message to Australians at the end of last week, when we saw Israel and Iran again jolt the market, was, ‘Please don’t panic’. And what we’ve seen since then just reinforces that position,” CEO Peter Khoury told Region.
“It really remains to be seen if it does escalate – and we have to be careful if it does, and supply issues start to become a factor – but at this point, we’ve not seen anything to suggest anything like that is going to happen.
“We’ve been looking at petrol prices for 100 years, and one consistency is that the Middle East is a hot zone – you’re always going to see instances of conflict – and following those flare-ups, there’s always a sudden reaction from the market, and then they normally stabilise. That’s what we’ve seen in the past 24 hours.”
Others have argued the markets are being a little too sanguine about the situation, and prices could easily change if Iran shuts off the Strait of Hormuz, for instance.
Up to 20 per cent of the world’s oil and 25 per cent of the world’s natural gas are shipped through this narrow passage between Oman and Iran every day.
“My concern here is that we’ve seen so many headlines about a possible risk of supply for oil over the last few years, which haven’t eventuated, that we now have a case of it’s the boy who cries wolf,” MST Financial senior energy analyst Saul Kavonic told the ABC this week.
“I don’t think the market and policy makers are yet to appreciate how high the risk is and what the consequences could be globally.”
Either way, it usually takes about seven to 10 days for global oil prices to be reflected at the bowser, so motorists would receive some warning of when it might be an opportune time to fill up.
