The ripple effect from another of United States President Donald Trump’s audacious social media proclamations is sending shockwaves across global markets, leaving Australians bracing themselves for the possibility of fuel price hikes in the upcoming weeks.
“So here we go again,” remarked Peter Khoury, the NRMA spokesperson, during a press conference held on Tuesday afternoon.
The comments from Khoury followed soon after Trump took to social media, issuing a threat to impose a 20 per cent fee on ships navigating through the Strait of Hormuz. This comes in the wake of renewed military strikes against Iran, which have already claimed over 25 lives in merely three days.
Trump expressed his desire for the United States to receive “reimbursement” for its efforts in safeguarding what he described as a “very rich portion of the world,” proposing a 20 per cent tax on all shipments passing through this crucial maritime passage.
“There’s no doubt that markets have reacted,” Khoury informed the gathered reporters, highlighting the tangible impacts of these developments on the global economic scene.
“What we know is this: there have been movements in both gas, oil and diesel over the past few weeks.”
The threat of a levy saw wobbles in the Asian market on Tuesday, with crude oil jumping to a one-month high of above US$85 ($122.61) a barrel, though prices remain well below May levels.
The potential for another round of fuel shock comes as the government prepares to end the fuel excise discount, which cuts 16 cents from every litre of petrol. The discount will end on 2 August, after its original June end date was extended.
But experts and peak bodies urge concern rather than alarm about the future of petrol prices in Australia.
Australia holds steady
Despite the global uncertainty, Australian wholesale prices, or terminal gate prices, are not reaching the same heights they did at the start of the conflict.
“Terminal gate prices are the best indicator of what we might see here at the bowser,” Khoury said.
“Diesel’s gone up about five cents this week. Unleaded’s gone up about two cents. So that gives you some idea about what we’re currently seeing.”
At the bowser, averages are below $1.70 for unleaded and $1.95 for diesel.
“Now, if the chaos continues in the Middle East, if we get more bizarre Truth Social posts, then oil prices might go up again,” Khoury warned.
Luke Hartigan, senior lecturer in economics at the University of Sydney, told SBS News that while the prospect of higher fuel prices is a concern, he was unsure at this stage if Trump’s threat would have a “major impact”.
“With Donald Trump, it seems to just change in an instant, so he’s bombing [Iran] now, maybe tomorrow he’ll be inviting them to the World Cup final,” he said.
Hartigan said that the practicalities of Trump enforcing such a toll make it unlikely he’d follow through.
“I don’t think he’d be able to do it … US companies will sue him because it affects their trade, just like with tariffs.”
Australia withstood the worst of the global oil shock that accompanied the war, which began in late February and early March.
Acting energy minister, Jason Clare, told ABC radio on Tuesday that Australia had 41 days of petrol on hand. For diesel and jet fuel, Australia has a supply of 37 days and 33 days, respectively.
This has increased from just 29 days of petrol, and 26 days of diesel in Australia’s reserve at the start of the war.
“We’ve been getting oil from Mexico and the United States, all these places we never usually get them from,” Hartigan said.
“I was so surprised at how resilient the world’s economy has been since March. We’ve had a big pick-up in inflation, but it’s not as bad as what we initially expected.”
Fuel excise discount could be extended
Inflation was partially curbed by the government’s fuel excise cut — which eased petrol prices by 32 cents per litre from April until the end of June, and by 16 cents from July.
The government is still considering whether to extend the fuel excise cut for a second time beyond its latest end date of 2 August.
“I think the Treasurer has been pretty clear that we’ll continue to monitor the situation,” Emergency Management Minister Kristy McBain told ABC radio on Tuesday.
“We’ve extended that obviously until the end of this month, and we’ll monitor the situation and see what else needs to be done.”
After the fuel excise discount was halved in July, the average price of unleaded petrol rose by 3.2 cents a litre.
Hartigan said, based on the current economic situation, he suspected the government would not extend the discount.
“It’s a politically positive thing to do, but it’s not an economically smart thing to do,” he said.
The first three months of the fuel excise discount, along with reducing the heavy vehicle road user charge, cost $2.9 billion.
“It’s a large amount of money that could be used to maintain roads or spend in other places. Because we’re not getting that revenue, money has to come from somewhere,” he said.
That would change, however, if the instability continued.
“Unfortunately, the chaos of the last three or four months appears now to be the new norm,” Khoury said.
“We want to make sure we see stability in the Middle East. Until we get a peace deal and until we see that Strait open permanently, there’s going to be volatility.”
— With additional reporting by Reuters.