Petrol Prices at Risk as Middle East Tensions Escalate

Highlights:

• A possible Israeli strike on Iran's oil facilities has sparked worries about disruptions to the global oil supply.
• Sydney's average unleaded petrol price is $1.55 per litre, a 30% drop from April's record highs, according to NRMA.
• Any escalation in the Middle East could reverse this petrol price relief, driving a sharp increase in fuel costs.

The escalating conflict in the Middle East is fueling concerns over a potential spike in petrol prices, as oil markets prepare for possible disruptions. Energy sector shares have already felt the impact, with growing fears that an Israeli strike on Iranian oil infrastructure could significantly disrupt the global oil supply.

At the time of writing, NRMA reports that the average price of regular unleaded petrol in Sydney is at a two-year low of $1.55 per litre, a significant drop from April's record highs. Nevertheless, this relief may be brief if tensions in the Middle East intensify.

U.S. President Joe Biden confirmed that discussions are ongoing between the U.S. and Israel about a potential strike on Iran’s oil infrastructure, heightening market volatility. Energy analysts warn that any disruption could trigger a sharp and sustained increase in global oil prices, reversing the current downward trend in petrol costs.

Tensions Driving Oil Market Uncertainty

Since the Middle East contributes roughly one-third of the world’s oil supply, any disruption in the region's production could have widespread global effects. The recent talks of military action, if carried out, could result in significant supply shortages, affecting petrol prices worldwide.

Motorists may face higher fuel costs in the coming weeks as markets react to unfolding geopolitical events.

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