Australian fuel prices could surge to A$3 per liter if geopolitical tensions escalate oil costs.

Australian fuel prices could surge to A$3 per liter if geopolitical tensions escalate oil costs. Westpac analysts warn that a month-long disruption to the Strait of Hormuz could push Brent crude to US$113 per barrel, with even Iranian production disruptions alone potentially driving prices to US$100. This matters because fuel is a major component of headline inflation, which already sits at 3.8 percent. With electricity prices up over 30 percent annually, additional fuel cost pressures could significantly worsen inflationary conditions across the economy. The Reserve Bank has already hiked rates once this year, and surging fuel expenses would impact everyday Australians through commuting costs and essential services, potentially forcing the RBA to consider further monetary policy responses to combat inflation.