Brent crude futures traded at $115.80/barrel on 26 October, higher than at any point since June 2022, because of declining global oil inventories and ongoing violence in the Middle East.
Global oil prices rose from $72.87/barrel to $114.44/barrel between 27 February and 4 May because of the US-Israeli war in Iran. They fell to a post-Iran war low of $71.57/barrel on 1 July, but began to rise after the collapse of a Pakistan-brokered US-Iran ceasefire.
The Australian Government does not expect oil prices to return to pre-Iran war levels until 2030 because of futures prices and infrastructure damage in the Middle East.
“Oil has been above $100 a barrel most of the last 6 weeks, $110 this week, and futures aren’t expecting a return to pre‑conflict prices until 2030,” Australian Treasurer Jim Chalmers told investors at the Citi 150 Australian Economic Forum on 23 October.
“As soon as the [Iran war ends], [fuel prices will] return to more normal levels, but there’d certainly be an overhang because there have been impacts on infrastructure in the Middle East,” Energy Minister Chris Bowen said on 24 October.
The Government does not expect the US’ recently announced diesel deal with Russia to impact refined oil prices. The deal will have a very modest impact on prices because it involves a small percentage of global fuel, Bowen said.
The Government ruled out Russian fuel imports on 12 October. It has increased high-level diplomatic engagement with Asian and Saudi Arabian officials over fuel security challenges.
But Australia does not face significant fuel supply challenges, despite global oil disruptions. The country had 39 days’ worth of petrol reserves, 31 days’ worth of diesel reserves, and 28 days’ worth of jet fuel reserves on 24 October, Bowen said at the time.
By Avinash Govind