‘Really scary’ petrol prices to stay until US midterms in November
Motorists have been warned to “strap in” for at least two months of high average fuel prices that are likely to exceed $2.50 per litre for petrol and $3 for diesel, with an emboldened Iranian regime “holding Donald Trump over a barrel”.
Supply chains expert David Leaney told nine.com.au and 9News that costs at the bowser were unlikely to abate until after the United States President’s popularity was tested in the midterm elections in November.
Sky high fuel prices could be set to stay. 9News
“Iran knows they've got Donald Trump over a barrel, it's an oil barrel, and on the side of the oil barrel is written 'midterm elections',” Australian National University lecturer Leaney said.
“President Trump has to be seen to have solved this problem, he has to be seen to be getting US petrol prices down at their gasoline stations, and he’s failing in doing that. So, he is absolutely desperate to get a deal.
“If you're in negotiations with somebody who has a desperately important time constraint, what do you do? You delay, you cause disruption and you bring them back to the table again and again. That's what Iran is doing and Trump is playing right into their hands.
“Unfortunately, it's strap in for the next two months, the petrol price is going to be all over the shop.”
The price of Brent crude – the global benchmark for oil prices – exceeded $108 per barrel this week after the East-West Pipeline in Saudi Arabia was damaged by drone attacks.
The crucial crude pipe transfers as much as five per cent of the world’s oil supply to the Red Sea, which borders southern Saudi Arabia, easing reliance on the Strait of Hormuz, to the Saudis’ north.
Oil supply through the Strait of Hormuz has been severely disrupted since the outbreak of the war. AP Photo/Vahid Salemi
At the bottom of the Red Sea is the Bab al-Mandab Strait – a trade route and chokepoint nicknamed the Gate of Tears.
“Why has it got such a happy name? Because it's between the Houthi rebels in Yemen and the Somalian pirates,” Leaney said.
“It's a terrible place for shipping but it's actually the entry into and out of the Red Sea and up into the Suez Canal through to Europe.
“The Iranian-backed Houthi rebels in Yemen have attacked the shipping in the Red Sea and Iraqi militia, backed by Iran, have attacked the pipeline itself and that's actually paused transport of oil through that pipeline, pushing it back into another choke point [the Strait of Hormuz].
“That’s why we’re seeing those really scary prices again.”
French President Emmanuel Macron this week stressed the need for alternative oil routes, posting to social media, “more routes mean less dependence. Less dependence means greater security. And greater security means less pressure on prices”.
Westpac chief economist Luci Ellis said she was not expecting oil prices to reach $200; however, the Commonwealth Bank warned it could surge to $US150 a barrel as an impending oil crunch looms.
The NRMA said the week ended with the national average price for unleaded at $2.34 per litre and $2.84 for diesel. Leaney predicted they would likely pass $2.50 and $3 per litre respectively.
Energy minister Chris Bowen insisted the government would not respond to every daily movement of the oil price. 9News
“There’s a real risk, it’s not definite, but it’s a real risk,” Leaney said.
The Albanese government is unlikely to cut the fuel excise again – which saved motorists 32 cents per litre in the three months from April to June.
Energy Minister Chris Bowen told ABC’s 7.30 the federal government would “not respond to every daily movement on the world oil price”.
“We made clear that the temporary excise cut was just that, temporary,” Bowen told media on Saturday.
Bowen said Anthony Albanese would tell the US administration “it would be much better for the world if Iran and the US reached a way forward” while the Prime Minister was in New York City this week.
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