Attacks on a major oilfield and a nearby processing plant in Saudi Arabia this week mean petrol prices are expected to rise soon in Australia.
Saudi is the world’s biggest oil supplier and if its production is affected, the world oil price jumps.
FuelWatch’s Manager Consumer Protection Division, Ben Derecki, told C&I that in Western Australia the price changes were most likely due to changes in the Singapore benchmark which will likely start to flow through to the Perth market. “Changes in the benchmark take around two weeks to flow through to our prices and this benchmark was already rising before the attacks on the Saudi Aramco facilities,” said Derecki.
The flow-on from the Saudi attack might not have reached WA and the rest of the country yet, but a price hike is most certainly around the corner.
Some economists have warned that under a worst-case scenario Australian petrol prices could hit $2 per litre, if tensions between the United States and Iran escalate into a full-blown war.
AMP chief economist Shane Oliver said each $US1 increase per barrel in oil prices leads to a 0.9 cent lift in petrol prices per litre, assuming no change to the Australian dollar. Therefore, in a scenario where crude oil more than doubles to $US150 per barrel, petrol prices could surge above $2 per litre.
Based on data from the Australian Institute of Petroleum, the average capital city unleaded petrol price rose to a three-month high of 143.6 cents per litre last week.
This is also usually considered a bad sign for the economy as consumers are not only forking out more for their fuel, they will also have less money to spend after they fill up their tanks.