7 September 2026
Brent crude is pushing toward US$100 a barrel and diesel is climbing again, here and in the United States, where the national average hit a record over the weekend. Most of the commentary has followed the Strait of Hormuz. Before the conflict, roughly 90 to 100 vessels transited each day. That number is now under 10.
Daniel Martin argued on SBS Australia that the Strait is not where the inflation signal is. Crude has to be converted into a finished product before it reaches the pump, and the constraint sits in refining rather than in the barrel.
The utilisation numbers carry the argument. Shell has been running at 102% of refining capacity, which is only possible because the measure builds in some downtime and Shell has taken none of it. Chevron and ExxonMobil sit at 95% and 97%. Crack spreads, the margin between crude and finished fuel, are back at 2022 levels.
“There is very little slack in the system.”
The read-through for Australia is that this can persist well beyond the conflict. If the Strait reopens and transits recover, refining tightness can still hold fuel and freight costs at a higher anchor. Sit that alongside regulated wages, energy, industrial inputs, construction and insurance claims, and a meaningful share of the inflation basket is outside the RBA’s direct influence.
That leaves the Bank with very little room to move but up. The market has already repriced accordingly. The Australian 10-year has lifted to 5.19%, a 15-year high, and a hike is now more likely than a cut. Per capita GDP is trending negative rather than positive, and stagflation is back in the conversation for the first time in years.
For portfolios, the muted return environment is the more useful frame. Over the past 12 months the ASX 200 has delivered around 5.5% to investors, with only 1.8% of that from price. Reporting season did little to change it. Headline earnings growth of 11.5% falls to 5.3% excluding resources, and to 2.5% excluding financials, against trimmed mean inflation of 3.6%.
Daniel isn’t reading this as a market to wait out.
“It’s really a time to be tactical.”
The work is at the asset allocation level: taking advantage of mismatches in capital flows, treating REITs as a source of yield without stepping into private credit, and staying with quality businesses that generate durable cash flows.