Oil price today: Oil surges as US-Iran ceasefire collapses, inflation risk jumps
Traders are nervous another closure of the Strait of Hormuz to shipping could swiftly force oil, gas and coal prices higher in an upward inflation risk.
Oil prices jumped and global share markets weakened on Monday after the United States and Iran exchanged missile fire and President Donald Trump declared the Middle East ceasefire over.
Brent crude rose 4.4 per cent to $US79.36 a barrel ($114.47) as the renewed conflict threatened to unleash another inflationary shock after the Reserve Bank lifted interest rates three times in 2026.
On Monday both Washington and Tehran asserted they controlled the Strait of Hormuz, which transits around 20 per cent of the world’s oil and gas supplies.
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By continuing you agree to our Terms and Privacy Policy.“Iran has said the Strait is closed until further notice, but the US and maritime authorities maintain that shipping can still transit the waterway,” said ANZ Bank’s Daniel Hynes.
“The latest exchange of strikes has raised fresh doubts about the prospects of a lasting agreement, despite continuing diplomatic contacts.”
Unconfirmed reports on Monday afternoon suggested Iranian missiles had struck US military facilities in Bahrain and Jordan, while attacks also targeted infrastructure in Qatar, Iraq and the United Arab Emirates.
US Central Command said it had hit dozens of targets across Iran in an attempt to degrade Tehran’s ability to attack international shipping passing through the Strait of Hormuz.
Mr Hynes said the recovery in vessel traffic through the Strait had reversed, with both inbound and outbound tanker movements declining over the past week.
“Renewed attacks in the region have reinforced safety concerns among shipowners and limited the willingness of operators to return to normal routing patterns,” he added.
On Monday afternoon, benchmark diesel prices, measured by London gas oil futures, rose 4.9 per cent to $US1057 a metric tonne, their highest level since mid-May.
“Diesel remains the key issue within the petroleum complex. Supply disruptions in the Persian Gulf, reduced Russian diesel exports and historically low distillate inventories have tightened global product balances,” said Mr Hynes.
Energy prices rise
On the share market the energy sector — including oil, gas and coal businesses — rose 0.8 per cent, but heavy losses for interest rate sensitive technology and healthcare businesses saw the broader S&P/ASX 200 Index close flat at 8808.5 points.
Brazil-focused oil producer Karoon Energy rose 2.2 per cent to $1.445, while fuel retailer and refiner Ampol surged 4.2 per cent to $36.75 as traders anticipated another rise in petrol prices.
In June the Federal Government extended its cut on the fuel excise from July 1 to August 2. This means motorists will receive 16 cents per litre off fuel over the period. Until July 1 the discount was a larger 32 cents per litre.
Any sustained rise in oil, gas and coal prices risks adding to inflation that reached 4 per cent over the 12 months to 2026.
Interest rate futures traders are pricing another 14 basis points of RBA rate increases from their existing level of 4.35 per cent over the rest of the year.
Only 6 basis points of tightening were priced by August, suggesting traders still see little chance of a rate increase at the central bank’s next meeting despite the renewed fighting.
On Tuesday the Westpac–Melbourne Institute Consumer Sentiment Index for June is expected to produce another weak reading, with cost-of-living pressures remaining the dominant concern for households despite some temporary relief from lower fuel excise.
“Consumer confidence is weak, and the sudden stop in the housing market will further undermine the spending backdrop through the second half of the year,” said Jason Todd the chief investment officer at Ten Cap Asset Management.
“Real household disposable income growth is forecast to slow from 6.9 percent to 4.2 per cent this year, sequential house price growth in Sydney and Melbourne has turned negative, and auction clearance rates are sitting at levels that have historically preceded national price declines. “
Wall Street futures markets point to heavy share market falls at the open on Monday, with the tech-heavy Nasdaq futures down 1.4 per cent around the closing bell in Australia.
