Brent crude has pushed above US$110 a barrel, renewing concerns that another global energy shock could feed directly into Australian inflation and strengthen the case for further Reserve Bank rate increases.
Brent was trading around US$110 a barrel this week as geopolitical tensions and supply concerns kept energy markets elevated, while West Texas Intermediate crude remained above US$100.
The rise comes at a particularly difficult time for Australia, where annual inflation is already running above the RBA’s 2%-3% target range.
Higher global oil prices feed into local petrol and diesel costs, but the impact can extend much further through the economy.
Transport costs spread through economy
Mining, agriculture, construction and transport businesses are particularly exposed because they consume large quantities of diesel.
Higher fuel expenses can then be passed through to supermarkets, retailers and other businesses through increased freight and logistics costs.
Airfares and shipping expenses can also rise when oil remains elevated for extended periods.
The RBA has repeatedly identified global energy prices as one of the biggest upside risks to its inflation forecasts.
The central bank lifted the cash rate to 4.60% in September partly because oil prices and other external cost pressures were developing more strongly than expected.
Another sustained move above US$110 would make the inflation outlook even more difficult.
The timing is especially important because Australia’s next quarterly inflation report is due shortly before the RBA’s November meeting.
If higher fuel prices combine with another strong underlying inflation reading, financial markets could increase expectations for a fifth rate increase in 2026.
For Australian households, that raises the risk of being squeezed from both directions: higher petrol prices and higher mortgage repayments at the same time.
