Commodity

International oil prices are rising amid the conflict in Iran, adding pressure to households that rely on heating oil. In the UK, heating oil has climbed from about 60p a litre before the conflict to about 97p a litre, according to price comparison website Boiler Juice. The UK government said it is providing £53m to support heating oil users and allocating £1bn to local authorities through the Crisis and Resilience Fund. It also said it has cut duty on red diesel used by agriculture and fishing to its lowest rate in more than 20 years.

Crude oil climbed above $US100 a barrel last week, with jet fuel rising to $US163 as the war drags on. Qantas said its fuel bill increased by $610 million in the year to June 2026, and it expects jet fuel prices to stay elevated through the rest of calendar year 2026. Virgin Australia said it is more exposed after its hedging of jet fuel refining margins fell from around 80 per cent to only 20 per cent for 1H27, and its fuel costs could rise by as much as $700 million. Average diesel prices have also jumped 45%.

US inflation ran hotter than expected in August, and producer prices posted their biggest month-on-month rise since May, reinforcing expectations for a Federal Reserve rate hike next week. The 10-year US Treasury yield rose to a fresh three-year high above 4.9% even after a bond buyback program was rolled out. Across Asia, economies are facing renewed inflation pressure and tighter policy constraints after oil climbed back above $100.

Rising oil prices linked to renewed US-Iran tensions have stoked inflation concerns and pushed up expectations for a US Federal Reserve rate hike. A firmer dollar and higher US Treasury yields added to the pressure, with COMEX gold futures settling about 1.5% lower at $4,408.90 an ounce. After climbing roughly 14% in August, the market has lifted the implied probability of a September hike to around 40%.

Average diesel prices in Virginia have moved above $6 a gallon, while average regular unleaded gasoline has risen past $4.12 a gallon. The increase has been driven by higher crude oil prices as tensions between the United States and Iran over shipping through the Strait of Hormuz escalate. Inflation has also inched up on higher energy and housing costs, and markets are expecting the Federal Reserve to raise interest rates.

Gold prices fell nearly 2% this week as a jump in crude oil and stubborn U.S. inflation strengthened expectations of further Federal Reserve rate hikes, weighing on demand for precious metals. WTI crude rose above $104 a barrel and is up nearly 16% over the past month. U.S. August CPI rose 3.4% year on year and PPI increased 5.4% annually, both slightly above expectations, pushing Treasury yields higher and pressuring gold.

Gold prices fell nearly 2% over the week as stronger-than-expected US inflation data and rising expectations of a Federal Reserve rate hike damped demand. Over the same period, WTI crude climbed above $104 a barrel amid geopolitical tensions, rising 9.6% on the week and adding to inflation pressure. The US August CPI rose 3.4% year on year, while higher energy costs further reduced gold’s appeal.

Metal prices broadly strengthened in August, with India rebar up nearly 10% month on month and 12% year on year, while hot-rolled coil prices in the U.S. and Europe rose about 3%. Aluminium increased to $3,251 per tonne. Global crude steel output fell around 4% month on month to 149.2 million tonnes in July, with China down about 4% year on year and production outside China up 3%. Australian iron ore prices declined about 2% month on month and 3% year on year, according to a Centrum report.

The International Energy Agency sharply lowered its forecast for global oil demand this year, citing an escalation of the war in the Middle East and surging energy prices. The agency said Ukrainian strikes on Russian refineries have also pushed fuel prices higher, with U.S. diesel prices topping $200/bbl, up 94%, and Europe and Asia close behind. The IEA now expects 2026 consumption to fall by 2.5 million barrels per day, far more than its previous estimate.

Chevron CEO Mike Wirth said crude oil buffers that had helped prevent prices from rising during the Iran war have been exhausted, leaving room for the conflict to lift prices further in the coming months. Brent crude futures were on track for an 8% weekly gain. Wirth also said Chevron’s $7 billion Venezuela expansion will be funded entirely by cash from its local joint ventures, targeting output of about 600,000 barrels per day by 2031.