<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Think </span><a href="https://www.9news.com.au/petrol-prices" rel="" target="" title="petrol prices"><span>petrol prices</span></a><span> are bad now? It's entirely possible you ain't seen nothing yet, if a worse-(but not worst)-case scenario plays out in the war in </span><a href="https://www.9news.com.au/iran" rel="" target="" title="Iran"><span>Iran</span></a><span>.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><a href="https://www.9news.com.au/westpac" rel="" target="" title="Westpac"><span>Westpac</span></a><span> has updated its modelling on the </span><a href="https://www.9news.com.au/economy" rel="" target="" title="economic"><span>economic</span></a><span> impacts brought about by the conflict, particularly on energy costs.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The big four bank's baseline – the scenario it thinks is most likely to play out – is the war lasts about a month, but that </span><a href="https://www.9news.com.au/world/us-israel-attacks-iran-strait-of-hormuz-explained-oil-gas-prices/f8e7c1ed-f6d9-4fe5-8277-6a11c09d8de6" rel="" target="" title="shipping through the Strait of Hormuz"><span>shipping through the Strait of Hormuz</span></a><span> takes a further month to normalise.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>PETROL PRICES:</span></strong><span> </span><a href="https://www.9news.com.au/national/fuel-crisis-australia-how-rideshare-fares-may-increase-driver-wear-cost-of-petrol-explained/827f5cf7-6f6c-43eb-9672-e79a77459ec7" target="_blank"><strong><span>Rideshare giant increases fuel surcharge as petrol prices bite</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>If that does play out, the bank forecasts oil prices will hit $US110 a barrel but average out at $US90 between April and June, with flow-on effects to hit Australian motorists, and economic growth to take a 0.1 of a percentage point hit.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Petrol and diesel prices are likely to rise by more than the direct pass-through from higher crude oil prices alone," said Sian Fenner, Westpac's head of business and industry economics. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"As a result, we expect retail petrol and diesel prices to average around $2.02/litre and $2.50/litre respectively.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/finance/usa-israel-attacks-iran-economic-impact-australia-oil-prices-westpac-forecasts/2a0de929-dd28-4b32-a6e6-33ce45e2b9ba" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Fertiliser prices such as urea are also up sharply and some airlines have already announced price increases due to the rise in jet fuel."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Considering </span><a href="https://www.9news.com.au/national/petrol-prices-australia-five-easy-ways-to-save-fuel-amid-crisis-explainer/99adb81c-b088-4cac-ad68-11ab7061714e" rel="" target="" title="Australian petrol and diesel prices"><span>Australian petrol and diesel prices</span></a><span> already averaged 219.5 and 245.6 cents a litre last week, and Brent crude is currently sitting above $US100 a barrel, that appears to be a relatively sedate impact on the economy for what the International Energy Agency has labelled the worst oil supply shock in global history.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/kyle-sandilands-jackie-o-kiis-fm-radio-show-contract-terminated-by-arn/11c5a875-b61b-4577-9d7d-3550169c564e" target="_blank"><strong><span>'I don't accept it': Kyle reveals contract terminated by ARN</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>However, there is significant uncertainty about how long the war will last, with </span><a href="https://www.9news.com.au/donald-trump" rel="" target="" title="US President Donald Trump's"><span>US President Donald Trump's</span></a><span> erratic statements about a timeframe, and his boasting that the conflict is won while demanding help from allies to open the Strait of Hormuz, doing nothing to quell market volatility.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Fenner said there "remains a material risk of a more extensive and prolonged disruption", and Westpac's alternative scenario now has the conflict lasting three months.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In such a case, the economic impact would be far worse.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Oil prices would average $US130 a barrel in the second quarter of the year, and at their peak would hit $US200.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/federal-budget-2026-government-hint-changes-capital-gains-tax/938c783c-4361-4c06-bde7-bc3168cd2016"><strong><span>With one sentence, treasurer drops major hint on $22 billion tax overhaul</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Given </span><a href="https://www.9news.com.au/australia" rel="" target="" title="Australian"><span>Australian</span></a><span> petrol prices rise about 1 cent per litre for every dollar oil increases by, drivers could end up being slugged more than $3 a litre in the coming months.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Underlying inflation would also remain above the Reserve Bank's target until well into 2027, and half a percentage point would be lopped off Australia's overall economic growth.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In a sobering end to her research note, Fenner said the turmoil could be even worse if energy infrastructure suffers permanent damage.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"This (alternative) scenario assumes no significant damage to oil and LNG production and freight facilities," she wrote.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"A permanent loss of supply would prolong the cost to the real economy. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It would also add to the risk of a sell-off in financial markets that would not only amplify the negative shock to the global economy but complicate the policy response."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><strong><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" 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