How a war across the Indian Ocean reaches Australian prices, incomes and the budget
Australia is a big exporter of coal, gas, iron ore and gold, and a big importer of fuel and fertiliser. So the same shock can make some Australians richer and others poorer. Pick a commodity to follow the chain.
Dearer fuel is feeding straight into inflation
- 01 · Shock→Strait of Hormuz closes
Iran closed the strait on 4 March, removing about 10 million barrels a day — the largest oil supply shock on record.
- 02 · World price→Brent up 55% in a month
From US$72.48 on 28 February to US$112.57 by 27 March. Still US$104.46 on 28 September.
- 03 · Trade prices→Fuel import prices +67.7%
Petroleum import prices rose 47.1% in the June quarter alone. Australia imports over 90% of its fuel, priced in US dollars.
- 04 · At home→Petrol 171c → 228c
Fuel rose 32.8% in March, the biggest monthly jump in the ABS series back to 2017. Diesel climbed from 181c to 292c a litre by April.
- 05 · EconomyInflation 4.6%, rates up
Headline inflation hit 4.6% in March and the RBA raised rates in March and May. Households cut travel and bought EVs.
The commodity scoreboard
Latest available prices and where each one enters the Australian economy.
| Commodity | Latest | Change | Australia | Where it enters the economy |
|---|---|---|---|---|
| Brent crude oil | US$104.46/bbl 28 Sep | +55% y/y | Importer | Petrol and diesel prices → CPI → RBA; freight and farm costs |
| Asian LNG (JKM) | ≈US$17.5/mmBtu June qtr average | +45% y/y | Exporter | Export earnings with a contract lag; company tax; east-coast gas prices |
| Thermal coal (Newcastle) | ≈US$147/t September | +13.3% y/y export prices | Exporter | Mining profits, NSW and Queensland royalties, terms of trade |
| Iron ore (62% Fe) | US$100.02/t 8 Sep | −4.4% y/y export prices | Exporter | WA royalties, the dollar, company tax |
| Gold | US$4,333/oz 2 Sep | −22% from record +24% y/y | Exporter | Miners’ profits, export earnings |
| Fertiliser (urea) | +25.1% q/q import prices, June qtr | +60% forecast urea, 2026 | Importer | Farm costs → food prices, with a lag |
From the barrel to the bowser
Oil is priced per barrel in US dollars; petrol is sold per litre in Australian dollars with GST. Three steps convert one into the other.
From late February to late March Brent rose about US$40, which by this rule explains roughly 40c of the 57c jump in petrol. Higher refining margins and the weaker dollar did the rest.
The 2026 oil shock, step by step
The shock arrived in weeks; its effects on prices, rates and spending are still unfolding seven months later.
- 28 FebUS and Israeli strikes on Iran begin. Brent is US$72.48.
- 4 MarIran closes the Strait of Hormuz, carrying about a fifth of world oil and LNG trade.
- 18 MarIran strikes Qatar’s Ras Laffan LNG complex (−17% capacity). The RBA raises rates to 4.10%.
- 27 MarBrent reaches US$112.57, up 55% in a month. Petrol averages 228c a litre in March.
- 1 AprFuel excise is halved for three months (26.3c a litre, costing $2.55b). Petrol falls to 206c; diesel still climbs to 292c.
- 5 MayThe RBA raises again, to 4.35%, after March inflation hits 4.6%.
- JulyThe excise cut ends; fuel prices rise 7.5% in the month.
- Mid SepDrones from Iraq briefly close a Saudi export route; the Houthis threaten the Bab el-Mandeb strait. Oil tops US$100 again.
- 29 SepThe RBA lifts rates to 4.60%, citing energy prices far above its August assumptions.