Oil Price Surge Adds Uncertainty to RBA Rate Outlook — Sydney Auction Clearance Rate at 64%

Weekly Market Focus

The surge in global oil prices is rapidly flowing through to Australian petrol stations. Rising fuel prices this week could push inflation to its highest level in three years and leave the Reserve Bank of Australia (RBA) facing a difficult choice between slowing economic growth and controlling inflation. International oil prices climbed to around US$91 per barrel over the weekend, marking one of the fastest increases in nearly four decades. Markets are even concerned that prices could exceed US$100 per barrel if shipping through the Strait of Hormuz is disrupted.

In Australia, fuel prices have already begun to climb. Over the weekend, the price of regular unleaded petrol in Sydney exceeded AUD $2.09 per litre, while Melbourne prices were roughly 10 cents cheaper. AMP chief economist Shane Oliver noted that for every US$1 increase in crude oil, petrol prices typically rise by about 1 Australian cent per litre. With oil prices jumping from US$67 before the conflict to US$91, petrol prices could rise by at least another 10 cents per litre. That would add roughly $14 per week to the average household’s fuel bill, or more than $700 per year.

Higher fuel prices could also push inflation further upward. The RBA previously forecast inflation to reach 4.2% by June, based on an assumed oil price of US$63.8 per barrel. With prices now around 40% higher, economists believe inflation could climb to about 4.6%, the highest level since late 2023. While markets generally expect the central bank to avoid immediate rate hikes in the near term, policymakers are concerned that households and businesses may begin to expect persistently higher inflation, potentially driving wages and prices even higher.

Meanwhile, rising oil prices may affect the broader economic outlook. Analysts note that the US economy is already facing declining employment and pressure from trade policies, and sustained high oil prices could further increase the risk of a global slowdown. In Australia, the agricultural sector is also beginning to feel the impact, with some farmers reporting tight fuel supplies. If energy costs continue to rise, it could not only increase the cost of living but also push up food prices and place additional pressure on the economy.

Last Week’s Auction Results

Sydney: A total of 1,278 properties were taken to auction, with results reported for 783 properties. Of these, 500 were sold, resulting in a clearance rate of 64%. The total auction value reached AUD 540,487,764, with a median price of AUD 1,670,000.

Melbourne: A total of 596 properties were taken to auction, with results reported for 415 properties. Among them, 244 were sold, achieving a clearance rate of 59%. The total auction value amounted to AUD 181,517,500, with a median price of AUD 875,000.