Brent crude rose 4.4 per cent to $US79.36 a barrel on Monday, hours after the United States and Iran traded missile fire and President Donald Trump declared the Middle East ceasefire over. Share markets weakened worldwide.
Both Washington and Tehran claimed control of the Strait of Hormuz that day. About 20 per cent of the world’s oil and gas supplies pass through it. Traders feared another closure would push oil, gas and coal prices up quickly and feed inflation.
Who controls the strait
“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 Daniel Hynes of ANZ Bank. He said fresh strikes had raised doubts about a lasting agreement, even with diplomatic contacts continuing.
Unconfirmed reports on Monday afternoon said Iranian missiles hit US military facilities in Bahrain and Jordan, and that attacks also hit infrastructure in Qatar, Iraq and the United Arab Emirates. US Central Command said it struck dozens of targets across Iran to weaken Tehran’s ability to attack ships near the strait.
Tanker traffic was already backsliding. Hynes said the recovery in vessel movements had reversed over the past week, with inbound and outbound tankers both falling. Shipowners remain wary: “Renewed attacks in the region have reinforced safety concerns,” he said, and operators are slow to return to normal routing.
Diesel is the pressure point
London gas oil futures, the benchmark for diesel, climbed 4.9 per cent to $US1057 a metric tonne, the highest since mid-May. “Diesel remains the key issue within the petroleum complex,” Hynes said, pointing to Persian Gulf supply disruptions, reduced Russian diesel exports and historically low distillate inventories.
Australian markets
The Australian share market felt it unevenly. Energy stocks gained 0.8 per cent, but steep losses in interest-rate-sensitive technology and healthcare shares left the S&P/ASX 200 flat at 8808.5 points. Fuel retailer and refiner Ampol jumped 4.2 per cent to $36.75 as traders expected higher petrol prices. Karoon Energy rose 2.2 per cent to $1.445. Nasdaq futures were down 1.4 per cent around the close in Australia.
Motorists have some cushion. The federal government extended its fuel excise cut from July 1 to August 2, so drivers receive 16 cents per litre off, down from 32 cents until July 1.
Inflation reached 4 per cent over the 12 months to 2026, and the Reserve Bank has lifted rates three times this year. Rate futures price a further 14 basis points of increases from the current 4.35 per cent, but only 6 basis points by August, so traders see little chance of a hike at the next meeting.
Households are under strain. Jason Todd, chief investment officer at Ten Cap Asset Management, said “consumer confidence is weak” and that the sudden stop in the housing market will drag on spending in the second half. He pointed to real household disposable income growth slowing from 6.9 percent to 4.2 per cent this year. The Westpac-Melbourne Institute index for June was due Tuesday.
