Global oil prices have spiked as the conflict in the Middle East escalates and Treasurer Jim Chalmers has warned sustained high prices will have consequences for households and the economy.
"We're focused on the human costs, but there are economic costs as well," Dr Chalmers told reporters in Canberra on Thursday.
After easing over the past year, Brent crude oil price was trading at about $77 a barrel, roughly seven per cent higher than a week and a half ago.
Treasurer Jim Chalmers says the Middle East conflict is leading to global economic uncertainty. (Mick Tsikas/AAP PHOTOS)
In Treasury's rough rule of thumb, every 10 per cent increase in the oil price sustained over the course of a year shaves 0.1 per cent off Australia's gross domestic product and adds about 0.4 percentage points to inflation.
"If those kinds of spikes are sustained, or indeed, of course, if they get worse, you can see the very direct impact that has on economies like ours," Dr Chalmers said.
"Further escalation of the conflict in the Middle East does risk more economic uncertainty."
The treasurer issued a warning to fuel retailers to ensure prices at the bowser accurately reflected global oil movements.
"We don't want to see the service stations take Australian motorists for mugs," he said.
Petrol prices have been much lower after fluctuating over the past few years, in part influenced by the conflict in Ukraine.
The Australian Competition and Consumer Commission monitors fuel and chair Gina Cass-Gottlieb said there was typically a correlation between prices paid by motorists and global oil prices, with some lag.
"But the monitoring does allow very clear scrutiny and an absolute shining of the light for consumers," Ms Cass-Gottlieb said.
The consumer watchdog plans to closely monitor fuel prices. (Dan Peled/AAP PHOTOS)
NRMA spokesperson Peter Khoury said market speculation following Iran's missile attack on Israel sent oil prices higher and those movements should soon be starting to filter down to prices at the bowser.
Wholesale prices had picked up about six cents a litre, in an indication motorists will probably be paying more next time they fill up.
Mr Khoury was hopeful global oil markets were already beginning to stabilise, reflecting weaker demand in China and a better outlook for production, suggesting the increase in prices would be short-lived.
"It's oil - anything can happen," Mr Khoury told AAP.
Australia's petrol prices are also influenced by cyclical patterns, with Sydney's cycle past its peak and expected to fall to the high $1.60s over the next few weeks.
In Melbourne, the average unleaded price was sitting at $1.61 a litre and in Brisbane, $1.88 litre, according to MotorMouth.
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