Households struggling with the cost of living are unlikely to receive any respite from petrol price pain, as a possible Israeli ground assault on Gaza raises fears that global oil prices could return to levels witnessed during last year’s global energy crisis.
While average unleaded petrol prices have fallen from their peak of 211 cents per litre recorded a fortnight ago, they still remain elevated at 204.1 cents per litre, according to analysis by the Australian Institute of Petroleum released on Monday.
But after a rebound in oil prices late last week, Australians could see costs at the bowser jump higher again.
The surge in oil prices continued on Monday, with Brent crude jumping above $USD91 a barrel, while West Texas Intermediate neared $USD88 a barrel after the Israeli government alerted residents in Gaza City to evacuate to the south, signalling a possible ground invasion was imminent.
“We’re headed to $100 (a barrel) no matter what this quarter,” Rabobank global energy strategist Joe DeLaura said following the rally in oil prices on Friday.
It follows a warning issued by Iran’s Foreign Minister Hossein Amirabdollahian that an escalation of the conflict by Israeli forces in Gaza could encourage other actors – such as terrorist organisation Hezbollah, which is backed by Lebanon and Iran – to become involved in war.
“Cutting off water, electricity, food and medicine for Gaza residents is an organised war crime … which could cause reactions by others in ‘the axis of resistance’,” the Foreign Minister told reporters in Beirut.
A broadening of the Israel-Hamas war, to include Iran, has been in sharp focus given the country is the world’s fifth-largest oil producer.
Under this scenario, global oil prices could push towards $USD120 a barrel ANZ analysts cautioned in a note to clients released on Monday.
“If (Iran) becomes involved, up to 20 million barrels a day of oil could be at risk of disruption directly and through obstructed logistics,” ANZ commodity strategists said.
“Any escalation of the conflict that threatens to block the Strait of Hormuz could push prices towards USD120 a barrel.”
In June last year, when crude oil prices last reached $120 a barrel, petrol prices reached a record high of $2.20 a litre.
However, ANZ analysts anticipated a one-in-five chance of this occurring again and instead viewed a price rise to $USD100 a barrel as a more likely outcome as Saudi Arabia’s supply cuts extended until the end of the year.
“There is a higher probability of Saudi Arabia ending its voluntary cuts in an event of production losses, but we expect them to remain in place this year, creating a market deficit of two million barrels a day in the fourth quarter,” the note read.
“This keeps in play our short-term target of $USD100 a barrel.”
In early October, Prime Minister Anthony Albanese ruled out a cut to the fuel excise despite the continued cost-of-living crunch.
“We don’t make tax policy on the run,” Mr Albanese said.