Petrol prices in Australia could hit $2.15 amid Ukraine-Russia trade sanction fears

Parts of Australia have been slammed with eye-watering petrol prices and it’s about to get much worse as the Ukraine-Russia conflict intensifies.

Price pain is headed for every Australian driver with signs indicating that the cost of petrol could leap to $2.15 per litre.

The price is fluctuating wildly as fears mount over what sanctions on Russia could mean for the oil industry.

Russia is by far the world‘s biggest exporter of crude and oil products but organisations are hesitant to trade after Western nations imposed sanctions because of Russia’s unlawful invasion of Ukraine last month.

Australia’s national average for petrol prices soared to a record 183.9 cents per litre last week off the back of the uncertainty.

The cost of petrol had soared to $US139 ($A190) per barrel last week – the highest since the global financial crisis in 2008.

The Commonwealth Bank of Australia (CBA) earlier on Tuesday noted that oil barrels had hit the $US140 ($A191) mark, although this was an outlier to the more usual $US125 ($A170) price.

Last week, the NRMA warned regular unleaded petrol could reach more than 200 cents per litre after the price of oil jumped over $10 a barrel in a single night.

CBA commodity analyst Vivek Dhar warned that motorists could be forking out as much as $2.15 a litre in the future to fill up their vehicle.

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[CHART] Oil prices have surged overnight with Brent closing in on the $140 mark at one stage, lately the benchmark was up 11% at $125 per barrel. Bloomberg pic.twitter.com/PfH7xXQiEB

— CommSec (@CommSec) March 7, 2022

A potential move by the US has prompted fresh fears about the price of oil, causing major price hikes over the weekend.

US Secretary of State Antony Blinken said on Sunday the government was considering outright bans on Russian oil and natural gas imports.

“We now see the likelihood of Russian exports being directly impacted by sanctions as very high,” Daniel Hynes, senior commodity strategy at ANZ, told CNBC.

“The move also suggests the market was not factoring in the potential for direct sanctions on Russia oil.”

For context, Russia exports about four million barrels of crude oil every day to the West, primarily Europe.

The nation’s total oil exports stood at about 7.8 million barrels per day as of December.

At time of writing, Australia’s national petrol price was $179 per litre, according to MotorMouth.

A map of petrol prices in Sydney. The more red, the more expensive the price.

The mounting costs of petrol has also sparked concerns about the state of inflation in Australia.

In 2021, the price of fuel rose by a whopping 30 per cent in a single year.

CNN reported that the price of oil is already up by 60 per cent so far for 2022.

Reserve Bank governor Philip Lowe said that ­soaring energy prices due to the conflict between Russia and Ukraine war might cause ­inflation to “spike higher” than forecast.

Shane Oliver, chief economist at AMP, warned in a note that energy supply fears had spooked investors across the stock market.

“Uncertainty over the war in Ukraine resulted in another volatile week in investment markets as investors worried about the worsening conflict and disruptions to energy supply following the intensification of Western sanctions on Russia,” he wrote.

“Reports of a fire at a Ukrainian nuclear power plant as a result of Russian shelling and the associated risk of a nuclear catastrophe added to the uncertainty.

“This saw US, European, Japanese and Chinese shares fall.”