By Jason Given · 2026-05-06 · 8 min read
When Iran's conflict with Israel escalated in early 2026, oil markets reacted immediately. Crude oil prices spiked as traders priced in the risk of disruption to the Strait of Hormuz — the narrow passage through which roughly 20% of global oil shipments pass.
For Australian borrowers, that is not an abstract geopolitical fact. It is a chain of events that runs directly from the Persian Gulf to your monthly repayment.
KPMG analysis: A sustained Middle East conflict is estimated to reduce Australian GDP growth by 0.3–0.4%. This typically means the RBA holds rates higher for longer, even if the domestic economy weakens.
The IMF published analysis in March 2026 estimating a 10% sustained rise in oil prices reduces global output by 0.15% in the first year. Australia, as a commodity exporter with high fuel dependency in regional areas, faces a more complex picture — we benefit from higher LNG and coal export prices but pay more for imported petroleum.
AMP chief economist Shane Oliver has noted that the RBA's challenge is that it cannot control the source of inflation (global supply shocks) but must respond to its domestic effects. That means rates stay higher until price pressures ease, regardless of whether the cause is domestic demand or imported fuel costs.
The key question for Adelaide borrowers is not whether you can predict what happens in the Middle East — no one can. The question is whether your loan is structured to handle further rate rises without causing financial stress.
If your current rate is not competitive, refinancing now — before potential further rises — makes sense. Lenders are still competing aggressively for refinancing business, offering cashback deals and rate discounts. A Lendology refinancing review compares your rate across 60+ lenders at no cost.
Three things you can do right now:
Book a rate review: Lendology reviews your existing loan against the current market at no cost. Book a chat →
Global conflict — particularly in oil-producing regions — drives up crude oil prices. Higher oil prices increase inflation directly through fuel costs and indirectly through supply chain and logistics costs. The RBA is mandated to keep inflation in the 2–3% band. When inflation rises, the RBA raises interest rates, which flows directly to your mortgage.
Petrol prices at Adelaide bowsers have risen approximately 30–40 cents per litre since the Iran conflict escalated. NRMA analysis suggests if crude exceeds US$100 per barrel, petrol could rise a further 20–25 cents on top of that — potentially adding $35–$45 per tank for a typical SUV.
Yes. KPMG estimates a sustained conflict would reduce Australian GDP growth by 0.3–0.4%. That typically means the RBA holds rates higher for longer rather than cutting, even if the domestic economy weakens. The RBA explicitly cited global conditions as a factor in the May 2026 rate rise.
The most effective steps are: review whether your current rate is competitive (book a free review with Lendology), consider whether a fixed or split loan suits your situation, and build a buffer into your budget now rather than after further rises. We can model what rate rises would cost you and identify the best structure for your circumstances.