A combination of factors are piling pressure on the price of fuel and there seems to be no clear release valve for that pressure at the moment. That means pump prices are going to go up, so time to start planning for the extra expenses.
🛢️ Brent opened the week above $90 and has remained elevated so far this week.
🛢️ The US and Iran appear to be firmly stuck on an escalation treadmill at the moment. Nobody is talking about talking. The ceasefire was declared over on 8 July, Iran suspended its commitments on 18 July, and there is no active mediation going on.
🛢️ Strait of Hormuz transits have effectively fallen back to zero with ships that try to transit actively being attacked on a daily basis.
🛢️ Global refining margins have also been rapidly rising as a refining shortage compounds the crude oil supply issues.
As we all know, Australia does not buy crude, it buys finished fuel from refineries in Singapore, South Korea and Malaysia, on about a month of reserves. The products market was short before the recent closure of Hormuz. This shortage is going to be felt at the pump in Australia and is already starting to flow through to pump prices.
We also have the second stage of excise cuts expiring on 12August, which will add another ~16 cents to fuel prices.
Unless something changes to dramatically to deescalate the crisis in the near future, it's time to budget for dramatically higher fuel prices through the end of 2026.