Global oil prices have climbed back towards US$106 a barrel, creating another inflation risk for Australia just weeks after the Reserve Bank lifted interest rates to a 15-year high.
Brent crude was trading around US$105.94 a barrel on Tuesday morning after gaining more than 1%, while West Texas Intermediate crude rose to around US$93.10.
The latest increase followed renewed attacks in the Middle East that raised concerns about Saudi Arabian production and wider energy supplies.
Oil prices had recently eased as markets responded to efforts to reduce geopolitical tensions, but the renewed rise has placed energy costs back at the centre of the global inflation debate.
Fuel costs feed through economy
For Australia, sustained oil prices above US$100 could affect inflation through petrol, diesel, freight, aviation and production costs.
Mining and agriculture are particularly exposed because large machinery and transport fleets consume substantial quantities of diesel.
Higher fuel costs can also work their way through grocery and retail prices as transportation expenses increase.
The renewed oil rally comes at a difficult time for the RBA.
The central bank lifted the cash rate to 4.60% in September after inflation accelerated again, with higher energy prices among the risks identified by policymakers.
Australia’s latest Consumer Price Index showed annual inflation running at 4.0%, still well above the RBA’s 2%-3% target.
A prolonged return to oil above US$100 could therefore reduce the likelihood of interest rate relief and potentially strengthen the case for another increase.
For Australian households already dealing with higher mortgage repayments, the return of elevated oil prices threatens to add another cost-of-living pressure heading into the final months of 2026.
