Australians could be set for more pain at the fuel pump after the OPEC+ group of oil producers announced it would extend supply cuts to the end of the year.
In a statement on Tuesday, Saudi Arabia announced it would maintain its production cut of one million barrels a day until December.
That will keep the country’s output at at nine million barrels a day, the lowest amount in several years, for six months in total.
Russia’s Deputy Prime Minister Alexander Novak also confirmed Moscow would maintain its own cutback, of 300,000 barrels a day, for the same period.
The price of Brent oil surged pass USD$90 a barrel following the announcements, it’s highest point since November last year, as the world braces for higher fuel costs driven by a lack of supply.
New South Wales, Victoria, Western Australia, and the Northern Territory are the only states to have an average unleaded price of less than $2/L according to FuelPrice Australia, but the OPEC+ cuts could push the average above that level nationwide.
South Australia currently has the highest average unleaded price of $2.07/L, while Adelaide ties Brisbane for the most expensive capital in which to buy petrol at $2.12/L.
As well as hitting hip pockets at the fuel pump, the cuts to oil supply will likely push up global inflation and potentially force the Reserve Bank to leave interest rates higher for longer.
That could worsen the cost of living crisis already straining household budgets and create a headache for the Albanese government as it attempts to repair its own bottom line as well as providing relief for those in need of support.
It could also lead to calls for a revival of the fuel excise rebate, which was introduced under the Morrison government last year to help shield Australians from soaring fuel costs.
However, market analysts say Brent crude oil is now in overbought territory, normally a sign that a drop in prices is on the horizon.
(Sky News)
