Oil prices have surged above $US100 ($143) a barrel as global trading resumed this morning, hitting their highest level in almost four years.
In a development that will add almost 20 cents to a litre of petrol if maintained, West Texas crude jumped from $US91 a barrel to $US108 a barrel, a spike of more than 18 per cent in just a few minutes.
The last time oil was above $US100 a barrel was in mid-2022 after Russia’s invasion of Ukraine. In the early stages of that war, oil peaked at $US115 a barrel.
But with growing fears over the effective closure of the Strait of Hormuz, through which about 20 per cent of the world’s oil is shipped, investors fear oil may have to go even higher.
Iran has warned that any vessels using the vital trade lane will be sunk.AP
AMP chief economist Shane Oliver, who predicted oil would go through the $US100 mark, said not only would high-priced crude push up inflation, it would also slow the global and Australian economies.
He said it was a concern for the Reserve Bank that if inflation lifted, workers and businesses may seek to protect themselves by pushing up wages and retail prices.
“That’s why it’s worried about inflation expectations, that households could get used to higher inflation, which would mean pressure to lift wages while businesses might think they can push up margins,” he said.
The spike in oil has also hit the Australian dollar which is now trading below US70 cents, having shed about 0.4 cents in the past hour.