Source : Perth Now news
Motorists are being warned about sky-high petrol prices over the coming months as the world depletes its oil reserves.
Oil prices were on the rise again on Monday, with benchmark Brent Crude oil up another 1.68 per cent to $US106.07, ($A151) bringing them closer to the psychological barrier of $US110 ($A157) a barrel.
Monday’s surge follows US President Donald Trump rejecting a peace deal from Iran which would end the war and reopen the critical Strait of Hormuz.
“I reject their proposal,” Mr Trump told reporters on Saturday, saying Iran is “losing so badly”.
“They want to make a deal, and I think that’s fine.
“I’d like to make a deal too. But that deal would not be acceptable.”
According to reports, Tehran offered to reopen the strategic waterway within seven days in exchange for sanctions relief and a ceasefire.
Commonwealth Bank head of commodities and sustainability Vivek Dhar told NewsWire under a worse case scenario prices could jump to $US150 ($A214) a barrel as countries compete for oil.
“In terms of what we have seen in the past to get that uncontrolled demand destruction we would probably need to see oil prices rise to $US150 ($A214) a barrel.
“Our outlook is this is the big risk we see.”
Motorists pay an additional 1 cent a litre at the petrol pump for every $1 increase in benchmark prices.
Since July motorists are now paying about 37 per cent more for unleaded fuel while diesel drivers have been slugged more than 45 per cent.
Mr Dhar is not forecasting oil prices to get to this point as he believes both sides will want to make a deal.
He points out prices could rapidly fall back towards $US70 ($A100) a barrel within weeks should a peace deal in the Middle East be signed.
But under a worst-case scenario there would be a lack of oil supply and countries having to bid against each other to secure their own reserves.
For months, governments and energy companies worldwide have been burning through global oil stockpiles due to the disruption of the critical Strait of Hormuz.
Commonwealth Bank forecasts the depletion of global oil and refined product inventories may only be four to nine weeks away.
This condensed timeline compares with inventory depletion estimates of 15‑20 weeks just under a month ago.
Control over the Strait of Hormuz remains a key point of leverage for both the US and Iran in negotiations.
Mr Dhar said while there were risks to global oil prices surge to $US150 a barrel both sides would likely want to make a deal.
“We have gotten to the point where we can’t wait for the mid-terms (elections) because back then the view was the US would wait until the election,” he said.
“That won’t work given oil markets have gotten structurally tighter we are going to have to see a movement towards a deal quite quickly.”
Australia has a ‘strong’ pipeline
Energy Minister Chris Bowen said Australia still had a strong pipeline of oil coming in despite the conflict in the Middle East.
“What we are seeing in the Middle East is deeply concerning, and it is more important than ever that Australia engages with other nations on global energy security and fuel security back home, in our national interest,” Mr Bowen said.
“That is why this week I will travel first to India, where I will meet Minister Yadav and visit the Jamnagar oil refinery in Gujarat, before travelling to Saudi Arabia for direct discussions with Prince Abdulaziz bin Salman Al Saud.
“Australia’s fuel supply remains secure and our strong relationships with international partners are an essential part of that work.”
Motorists may still pay more for fuel as governments all but ruled out bringing back the fuel excise cut, which supported Australian motorists during a pivotal point of the US-Iran war.
During the early stages of the Middle East war petrol prices exploded with regular unleaded petrol hovering around 218 to 225 cents per litre, while diesel prices sat significantly higher at roughly 309 to 318 cents per litre.
In response, the Albanese government previously announced a fuel excise cut and gave the GST on fuel, giving motorists 32 cents a litre back on their fuel prices during the height of the Iran War.
This was a temporary measure between April and August to reduce the burden of surging fuel costs
