The International Monetary Fund (IMF) has warned that a worsening crisis in the Middle East could lead to a significant increase in global oil prices, potentially pushing Australian petrol prices up by 30 cents per litre. This scenario, outlined in the IMF's latest World Economic Outlook, highlights the risks to global growth and inflation from ongoing turmoil in commodity and bond markets.
Impact of Rising Oil Prices
According to the IMF, if global oil prices were to surge to $US130 a barrel in the coming months, it would exert additional pressure on the Reserve Bank of Australia (RBA) to raise interest rates. The IMF's model suggests that the conflict in the Middle East could persist through June 2027, keeping critical shipping routes closed and delaying the recovery of oil supply.
“"With limited scope for further inventory drawdown, oil prices reach $US130 from the fourth quarter of 2026 to the first quarter of 2027," the IMF stated.
Currently, unleaded petrol prices in major east coast cities have exceeded $2.40 a litre, nearing six-month highs, while diesel prices remain elevated at around $2.80. Economists estimate that a $US30 increase in crude oil prices could push unleaded petrol prices towards $2.70, marking the highest levels since the onset of the war over seven months ago.
