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Petrol prices surge to 6-month high and there's more bad news ahead

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Petrol prices could surge further. Source: AAP
Petrol prices could surge further. Source: AAP

Australian petrol prices spiked last week, coinciding with the start of Easter holidays.

According to Commsec, citing data from the Australian Institute of Petroleum, the average price for unleaded petrol jumped 5.5 cents to 150 cents per litre, leaving it at the highest level in nearly six months.

Average metropolitan prices rose by 7.1 cents to 152.4 cents per litre, near triple the 2.5 cent increase in regional areas where average prices rose to 145.3 cents per litre.

“Motorists would’ve experienced some petrol pump pain as they hit the road for the Easter holiday break,” said Ryan Felsman, Senior Economist at Commsec.

“Last week, the average price of unleaded petrol rose in Adelaide, Brisbane and Sydney by between 12.8-16.0 cents a litre.

“Across the capital cities, unleaded petrol prices are currently in a range of $1.44-$1.55 a litre. Just two months ago, prices were around $1.20 a litre.”

Image: Commsec

According to Commsec, gross retail margins rose to 12.02 cents a litre during the week, the highest level average profit levels at two-month highs.

While that may have been influenced by the start of Easter holidays, most of the increase in retail prices this year has been due to higher wholesale costs, driven by surging crude oil prices which have risen in each of the past seven weeks.

“[Crude oil has been] supported by continued OPEC-Russian production cuts and supply disruptions in Venezuela, Libya and Sudan, which have pushed up prices by 45% this year,” Felsman said.

Although average petrol prices across the country have started to ease in recent days, both Brent and West Teas Intermediate crude prices spiked by another 3% on Monday following news the United States will end all waivers on Iranian crude exports as part of economic sanctions introduced late last year.

The waivers had permitted some crude oil importers, including China and India, to receive Iranian crude without being subject to possible US sanctions. Markets see the ban on Iranian crude exports as increasing the risk of tighter global supply, explaining the size of the price spike seen on Monday.

Should the price rise be sustained or built upon in the near-term, it’s highly likely that will flow through to even higher petrol prices for Australian motorists.

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