Brent crude traded above US$91 a barrel on Monday morning for the first time since 11 June, and the Australian share market promptly split along the line the war has drawn: energy producers up, fuel burners down, and everyone else treading water.
The benchmark tells the story badly. The ASX 200 opened 0.45 per cent higher and had faded to a 0.13 per cent gain by mid-morning, sitting at 8,797.7, one point above Friday's close. Underneath, Brent's 3.1 per cent rise, a 27.8 per cent rally since its 1 July low, was repricing companies one at a time: Viva Energy rose 4.7 per cent, Woodside 2.7 per cent and Ampol 2.6 per cent, while Flight Centre fell 4.4 per cent and Qantas 1.4 per cent as jet fuel maths worked against them. Gold miners including Evolution and Regis went backwards despite the war premium.
For households the sequencing has not improved since last week; it has hardened. The NRMA's most recent fuel update puts the national average near $2.00 a litre, with more than 550 of the country's 7,798 service stations short of at least one fuel type, though Australia holds around 39 days of petrol reserves and no rationing is in place. Monday's crude move reaches the bowser in one to two weeks, which lands it in early August, exactly when the remaining half of the fuel excise discount comes off and adds roughly another 16 cents a litre. The producers booking the gains and the motorists funding them are on opposite sides of the same trade.
The week gives the Reserve Bank plenty to read. June labour force figures arrive from the ABS on Thursday at 11.30am, June-quarter inflation follows on 29 July, and the cash rate, at 4.35 per cent after three hikes this cycle, is next decided on 11 August. An oil shock still feeding into transport and freight costs is the strongest argument the hawks have, and it strengthened again overnight.
The number to watch this week is not the index, which is standing still, but the ACCC's weekly capital-city average, which will show how much of a 27.8 per cent crude rally has reached the pump before the excise arrives to finish the job.
