Brent crude traded above US$96 a barrel on Thursday, its highest in six weeks and a fifth straight session of gains, pulling Australian energy and gold stocks up with it and lifting the wider market. The same rise will reach Australian drivers within a fortnight, just as the government's fuel tax relief runs out.
The S&P/ASX 200 closed at 8,823 on Wednesday, up 0.35 per cent, and climbed again on Thursday morning to about 8,840, according to market data from Trading Economics. The big four banks added between 1.1 and 1.4 per cent. Woodside and Santos, the two ASX names most exposed to the oil price, rose with crude. Gold reached about US$4,140 an ounce, its highest since early July on safe-haven buying, though it sits well below the record of US$5,597 set in late January. The Australian dollar bought about 70.2 US cents.
The move in oil is a war premium. Crude has risen for five sessions straight as the United States struck Iran for an 11th night and Iran kept up its disruption of tanker traffic through the Strait of Hormuz, the channel that carries about a fifth of the world's seaborne oil. West Texas Intermediate traded near US$88.
For households the arithmetic is simpler than the market's. The national average petrol price was already 170.1 cents a litre in the first week of July, on figures from the Australian Institute of Petroleum, before this week's oil move worked through. On top of the crude price, the tax on every litre is about to go up.
The government halved its excise relief on 1 July, clawing back about 16 cents a litre of the discount it had run since April. The rest ends on 1 August, when the excise returns to 52.6 cents a litre on petrol and diesel. The Australian Competition and Consumer Commission said on 10 July it would watch retailers weekly to confirm the change shows up accurately at the pump, and is not used as cover for wider margin rises.
So two forces are pushing the same way in the same fortnight. A crude price set by a war on the other side of the world, and a fuel tax set in Canberra, both land on the same tank of petrol. The producers most exposed to the oil price are among the market's winners this week, and the Commonwealth collects the full excise again from the start of August. The driver pays both.
The Reserve Bank's next board meeting is on 11 August, days after the excise reverts. Petrol feeds straight into the consumer price index, so a sustained lift at the bowser makes the inflation number the bank is watching harder to bring down. That is the figure to watch through August: a pump price driven up by a conflict Australia has almost no hand in, and a tax decision that was entirely its own.
