Arabic version: الخزانة تحذر من أن مخاطر حرب الشرق الأوسط قد تتفاقم

According to ABC News, Treasury has warned Treasurer Jim Chalmers that the economic risks to Australia from the continuing war in the Middle East are increasing, as the federal government considers whether to extend petrol and diesel relief into August.

Oil prices have risen since a memorandum of understanding between the United States and Iran unravelled, affecting Australian fuel prices. Diesel remains markedly above prewar prices nationwide despite sitting below late-March peaks. Petrol is below its prewar benchmark in Melbourne, Sydney and Brisbane, but remains above it elsewhere.

The government halved the fuel excise and heavy-vehicle road-user charge for three months, then extended a smaller discount of about 16 cents per litre for July. That discount ends on Sunday. Prime Minister Anthony Albanese and Mr Chalmers have said the relief will not last forever and that there are no plans for an August extension, while not ruling one out.

In briefing notes seen by ABC, Treasury said the global oil market had weaker buffers against ongoing supply disruptions. It cited depleted oil reserves, attacks by the Houthi militia in the Red Sea, and pressure on diesel markets following Ukrainian drone strikes on Russian refineries and a subsequent Russian diesel-export ban. Treasury said crude prices were likely to stay elevated in the near term and that price pressures could intensify if current conditions persist.

The May budget included a scenario in which oil reaches $US200 a barrel in September, roughly double its recent level, producing peak headline inflation of about 7.25 per cent. The Australian Bureau of Statistics is due to release monthly inflation figures on Wednesday, ahead of the Reserve Bank board’s August 10 and 11 interest-rate meeting. Mr Albanese said the longer the war continues, the greater its impact on Australia.