Transport companies are seeking emergency financial payments and a cut to the heavy vehicle road user charge as part of a nationwide response to fuel shortages caused by the Iran war.

Australia’s consumer watchdog on Friday reported average diesel prices in the five largest cities hit 303.5 cents per litre, rising 27.8 cents in a week.

Unleaded petrol prices hit 252.2 cents per litre.

Prime Minister Anthony Albanese has promised a national response to the fuel crisis, with supply-related measures expected to be announced on Saturday.

The National Road Transport Association has called for three “urgent” actions – emergency financial support payments for affected transport businesses, a six-month moratorium on heavy vehicle equipment loan repayments and a suspension of the road user charge.

“A consistent, nationwide approach is critical to ensure operators aren’t facing a patchwork of measures and can access the same level of support regardless of where they operate,” chief executive Warren Clark said.

“These are practical, short-term measures that would deliver immediate cashflow relief and help keep trucks on the road.”

The coalition has called for a reduction in the fuel excise to provide relief to motorists.

But Mr Clark said the reduction alone would not be enough to address the scale of the current crisis.

“The government’s response has fallen well short of what industry urgently needs,” he said.

“Operators are crying out for help, yet the government continues to be largely absent at a time when decisive intervention is critical.”

Mr Albanese will meet state and territory leaders on Monday to co-ordinate a national cabinet response.

Opposition Leader Angus Taylor said halving the 52.6c a litre excise, as well as the heavy vehicle road user charge, would provide immediate relief for households.

The government said new cargoes had replaced six fuel shipments to Australia that had been cancelled or deferred.

Labor has repeatedly insisted Australia has enough fuel and any shortages are being driven by panic-buying.

The US-led war on Iran has disrupted one of the world’s most important oil corridors, sending global oil prices skyrocketing.

A powerful tropical cyclone in Western Australia has disrupted production at the ‌country’s two biggest liquefied natural gas plants run by Chevron and Woodside, exacerbating a global supply crunch caused by the conflict in the Middle East.

Australia became the world’s second-largest LNG exporter after ‌Qatar shut down production in March following damage to its facilities from Iranian strikes. 

Global LNG flows out of the Middle East have also been upended by Iran’s blockage of the Strait ‌of Hormuz.

Chevron said it was working to restore production at its Gorgon and Wheatstone LNG facilities in Western Australia following outages that were likely due to Tropical Cyclone Narelle, a category three storm, which crossed the coast on Friday.

Gorgon is Australia’s largest LNG export facility, producing 15.6 million tonnes a year with three processing trains, while the smaller Wheatstone consists of two trains producing 8.9 million tonnes.

Woodside also said production at its Karratha gas plant had been disrupted by the cyclone. 

The gas plant is the onshore processing facility for the North ‌West Shelf, Australia’s ‌oldest and second-largest LNG project, producing ⁠14.3 million tonnes a year, down from 16.9 million tonnes a year after it shut down one of its ​five production trains.

MST Marquee analyst Saul Kavonic estimated the cyclone was disrupting more than 30 million tonnes a year of Australian LNG supply. 

Combined with the shock from the Middle East, he said more than a quarter of global LNG supply was affected.

“This will exacerbate gas market tightness in Asia and Europe, especially if it takes more than a matter of days to normalise Australian production levels again,” Kavonic said.

A Chevron Australia spokesperson said an outage occurred at the Wheatstone platform, about 225km off Australia’s west coast, on ⁠Thursday, causing a suspension of onshore gas production.

“All personnel were demobilised from ‌the Wheatstone Platform ahead ​of the cyclone passing, which has been operated remotely from our Perth office since Tuesday afternoon,” the spokesperson said.

Three hours later, an outage shut down one of three LNG production ​trains at the ‌Gorgon facility on Barrow Island, about 50km offshore.

“We will resume full production at both facilities once it is safe to do so,” a Chevron Australia spokesperson said.

Woodside ​said production at the North West Shelf project would restart once it is able to send workers back to its offshore facilities. 

It said operations were continuing at its Macedon domestic gas plant and its Pluto LNG facility.

“If there is any material impact to production or assets, Woodside will update the market,” a ​spokesperson ​said.

Economists at Australia’s largest lender have issued a dire warning for consumers, forecasting inflation to scale new heights as hopes of a quick resolution to the Iran war fade.

The Commonwealth Bank (CBA) expects headline inflation to peak at 5.4 per cent by June – 1.4 per cent higher than its previous forecast.

As markets try to parse conflicting statements from the US and Iran about ceasefire talks, CBA head of Australian economics Belinda Allen and her team were unconvinced by the rhetoric coming out of the White House.

“In our central case, this conflict still has some time to run, and the Strait of Hormuz is unlikely to re-open quickly despite ongoing reports of US-Iran talks,” they said in a research note on Friday.

CBA’s base case is predicated on the benchmark oil price – currently about $US105 a barrel – sitting at $US120 a barrel for about three months.

Treasury also modelled a scenario in which oil prices hit $US120, but forecast inflation to rise as high as five per cent.

The Australian Bureau of Statistics reported on Wednesday that inflation eased to 3.7 per cent in the year to February, although the data pre-dated the start of the Middle East conflict.

The inflation spike is expected to be smaller than when the Russia-Ukraine war combined with the post-COVID-19 pandemic economic bounce and inflation peaked at 7.8 per cent, CBA said.

“However, risks are tilted to the upside, particularly given the recent escalation in the conflict and the possibility that it persists for longer than currently priced by markets,” the bank said.

The difference this time is the impact on energy markets is expected to have a greater impact on slowing economic activity.

CBA’s growth forecast for 2026 was slashed from 1.9 per cent to 1.6 per cent, while unemployment was expected to drift up from 4.3 per cent to 4.6 per cent by early 2027.

Westpac chief economist Luci Ellis said it would be a mistake to treat the current crisis the same as COVID-19.

“The current conflict bears little resemblance to the COVID pandemic, so policy responses should differ,” she said. 

“We were surprised that work-from-home mandates have been seriously proposed.”

Australia’s fuel supply disruption is being caused by consumer stockpiling, not a reduction in supply.

The government should instead make more effort to publicise the restocking of petrol stations that have run out, and measures to free up supply, such as changes to fuel standards and the oil-for-gas deal with Singapore, Dr Ellis said.

In a positive development for Australia’s oil supplies, several tankers operated by countries not involved in the conflict have been afforded safe passage through the Strait of Hormuz in recent days, Westpac economists Elliot Clarke and Ryan Wells noted.

“If Iranian authorities hold to this guidance, China’s fleet and vessels from other non-aligned countries such as Malaysia (a key supplier to Australia who reportedly reached an agreement with Iran overnight) could slowly reduce the current global deficiency in crude and LNG supply, even if the US/Israel and Iran continue military actions against one another,” they said.

But the story of the conflict is more than just higher oil prices, CBA said.

Fuel is an input across the economy, and as businesses pass on higher transport and energy costs, underlying inflation will rise across the board.

Supply chains for broader industrial and agricultural inputs, such as fertiliser and aluminium, are also being disrupted.

Oil is also used to manufacture plastics, the costs of which have soared since the war broke out, JP Morgan analyst Ben Jarman said.

“Higher plastics costs should be impacting a broad swathe of other manufacturing processes including furniture, pharmaceuticals and printing, as well as construction to a lesser extent,” he said.

Asian stock markets were swept up in ‌a global rout on Friday, tracking Wall Street lower as the threat of a protracted energy shock out of the war-torn Middle East sent borrowing costs spiralling higher.

Investors ‌took a modicum of comfort from US President Donald Trump’s decision to extend his ultimatum to strike Iranian power plants by 10 days, after pushing back his initial 48-hour deadline ‌by five days. Brent crude futures fell 1.0 per cent to $US107.07 ($A154.62) a barrel having jumped nearly 6.0 per cent overnight.

However, movement in oil prices was small and reports that Trump was considering sending more troops only added to concern about the war escalating into a ground conflict, with no certainty that the Strait of Hormuz could be reopened to shipping soon.

Iran has dismissed a US proposal to end the conflict as “one sided and unfair”.

Wall Street futures bounced 0.2 per cent in Asia. Overnight, the Nasdaq Composite slumped 2.4 per cent to be ‌down nearly 11 per cent from its ‌record close on October ⁠29, confirming it has been in a correction since then.

“The Middle East headlines won’t stop for the weekend ​so the weight of money leans towards assuming another risk-off week ahead as the US continues to add military resources to the region,” said ITC Markets senior FX analyst Sean Callow.

“Many see the Iranian regime as holding the upper hand and doubt that there are indeed productive negotiations with the US in process… Underlying pressure towards higher oil prices, USD and yields along with weaker equities appears intact.”

On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan tumbled 1.4 per cent and was set for a weekly drop of 3.0 per cent. Japan’s ⁠Nikkei skidded 1.3 per cent and was down 0.9 per cent for the week.

South Korea’s KOSPI plunged 3.0 per cent, ‌bringing its weekly loss ​to a staggering 8.5 per cent. Chinese blue chips fell 1.0 per cent, while Hong Kong’s Hang Seng index slipped 0.4 per cent.

Citi analysts said more severe scenarios of the Middle East conflict could ​drag global growth ‌below 2.0 per cent this year, push headline inflation beyond 4.0 per cent and stoke recession risk.

“Asia, particularly Korea, Japan, and India, faces the most intense headwinds due to heavy ​reliance on imported fuel and direct exposure to disruptions in the Strait of Hormuz,” they said in a client note.

Norway’s Norges Bank was the latest central bank to flag inflation risk and interest rate hikes ahead as the war rages on. Having held policy steady on Thursday, ​the ​bank said it expected to raise rates this year, a stark ​contrast with its earlier forecast of three cuts by the end of 2028.

Global bond ‌yields jumped anew after the climb in oil prices amplified inflation concern. Japan’s 10-year yields rose 4 basis points to 2.31 per cent, while Australia’s benchmark 10-year yields surged 7 bps to 5.076 per cent.

The two-year US Treasury yield held steady at 3.9714 per cent on Friday, having jumped 10 basis points overnight as traders priced in more risk of a rate rise from the US Federal Reserve this year, which is about 50 per cent priced in.

In currencies, the US dollar was bathed in safe-haven glow having gained for three sessions. The ​risk-sensitive Australian dollar bore the brunt of market selloff, falling 0.2 per cent to a two-month low of $US0.6872 ($A0.9924) after a 0.8 per cent fall overnight.

The euro held at $US1.1533 ($A1.6655) after slipping ​0.3 per cent overnight, while the yen hovered at 159.70 ⁠a dollar. Market watchers expect intervention should the yen hit 160.

Gold rose 0.6 per cent to $US4,405 ($A6,361) an ounce after a ​nearly 3.0 per cent fall overnight.

Australia’s government insists it still has not received any direct requests from the United States for military aid in its war with Iran, after a public attack from President Donald Trump.

The US president criticised allied countries for not providing assistance in the conflict, as the closure of the Strait of Hormuz continues to put pressure on global oil prices.

“(UK Prime Minister Keir Starmer) didn’t want to help us. Australia, too. Australia was not great. I was a little surprised by Australia,” Mr Trump said.

Australia is providing military assistance in the Persian Gulf region following a request from the United Arab Emirates.

Defence Minister Richard Marles would not be drawn on the president’s criticism, but said no requests from the White House have been received.

“The last thing I’m going to do is give a running commentary on what the president has said, all we can do is respond to this situation, respond to the requests that are made of us,” he told ABC TV on Friday.

“We’re looking at all the requests that we get from countries around the world, including the United States, and obviously we answer them in the context of our national interest.

“Defending the states of the Gulf is really important given our relationship with them.”

An E-7A Wedgetail military surveillance plane, along with 85 defence personnel, has been sent to the UAE to monitor Iranian drone strikes.

The request for help from the UAE has been the only one received by Australia since the US-Israel war with Iran began, Mr Marles said. 

“The E-7 is in in the region, and it is playing a really important part,” he said.

“It is playing an important role in respect of the defence of the gulf states. We will work this through with our with our friends and our partners, to look at what role we can play.

The US president has extended a self-imposed deadline to Iran to re-open the Strait of Hormuz to April 6 before potential strikes on energy infrastructure.

Federal minister Murray Watt said it was imperative for the war to be resolved as soon as possible.

“From Australia’s perspective, we support anything that is going to get the Strait of Hormuz open as quickly as possible and restore some of the interrupted fuel chains that we have,” Senator Watt told ABC Radio on Friday.

“The longer this dispute goes on and the longer the Strait of Hormuz is closed, that’s going to continue to have impacts on the Australian economy and Australian families.”

Coalition frontbencher Sarah Henderson said the government needed to outline why military help had not been provided to the US.

“It’s quite embarrassing that in the international stage we have been called out as not providing appropriate assistance to the US,” she told Sky News.

“The US is our strongest defence ally. This is pretty grim news overnight from the United States.”

Fuel companies are being forced to share data about their supplies and sales in Australia’s most populous state, as petrol caps reach city service stations.

Notices demanding a wide range of information have been issued to fuel providers to help form a complete view of NSW’s fuel supplies as the Middle East war drags on, Environment Minister Penny Sharpe announced on Friday. 

The information would help the state government prepare for the exercise of emergency powers if needed, she said.

“We need a clear picture of the situation to best support people and communities as we navigate the challenges posed by this global conflict,” Ms Sharpe said in a statement.

Oil prices have skyrocketed since the US and Israel launched attacks on Iran in late February.

The new edict from NSW comes as limits on how much petrol people can buy reaches at least one metropolitan service station.

An employee at a Shell-branded service station on Sydney’s northern beaches confirmed to AAP the outlet had implemented a cap of 50 litres per person and banned the filling of jerry cans.

The crisis could also be putting at risk older people relying on home care visits.

Reports of aged care workers not taking up home visit shifts because of rising fuel prices have become more common, advocacy group Ageing Australia said.

Some aged care providers were reporting monthly fuel bill rises of more than half, leaving patients vulnerable, chief executive Tom Symondson said.

“We want to avoid a re-run of the sector’s experience in the early days of COVID, where we saw hospitals and their staff designated as essential services and aged care left to fend for itself,” Mr Symondson said.

The United Workers Union argues in-home aged care workers, who travel an average of 260km per week, should be reimbursed by the federal government with fuel vouchers.

“Older Australians are in danger of missing the care they rely on every day,” the union’s aged care director Catalina Gonzalez said.

“If workers can’t afford the fuel to do their work, older Australians miss medications, go without meals, miss essential wound care, and are left without personal care.”

More than 500 service stations were without some kind of fuel on Thursday but more petrol and diesel was flowing to the regions, Energy Minister Chris Bowen told parliament.

Iran has been attacking regional energy infrastructure and effectively closed the Strait of Hormuz, forcing countries to respond to global fuel supply shortages.

National cabinet will meet to discuss the ongoing fuel crisis on Monday.

The government has insisted Australia has enough fuel and that shortages are being driven by panic buying, which was seen during COVID-19 lockdowns.

However, the panic buying is being driven by a different set of forces than those during the pandemic, one expert says.

Tim Neal, who has researched panic buying at scale, said the behaviour during the pandemic was primarily about future supply concerns from lockdown disruptions. 

“With fuel prices, there are supply concerns especially when it comes to diesel,” Dr Neal told AAP. 

“But what initially started the panic buying was a price motive. People are stocking up because you expect future price increases.”

Sudden spikes in demand could quickly outstrip supply, leading to temporary outages, Dr Neal said.

But he said it was too early to determine whether shortages were driven more by supply disruptions or surging demand, but both factors were likely at play.

Efforts to curb panic buying were often limited once it began, Dr Neal said, because the behaviour becomes self-reinforcing.

“All you need for panic buying to be rational is to believe that other people are going to be panicking,” he said.

Tougher penalties for price gouging passed parliament on Thursday afternoon.

Legislation doubling the maximum fine for false and misleading conduct or cartel behaviour to $100 million was given the green light by the Senate, in a bid to deter petrol companies from profiting from the shortages.

Adam Bratt couldn’t help but feel stressed about his finances after seeing fuel prices skyrocket.

It reached breaking point this week for the Melbourne charity shop manager, who opted to abandon his car and rely on public transport for his daily commute to work.

He’s far from alone.

Many Australians are changing their travel habits, reporting similar shifts in their commutes, turning to walking or cycling or cutting back on travel altogether.

“Filling a tank of petrol has become a lot more painful all of a sudden,” Mr Bratt told AAP.

He now walks from his home, catches two trains and walks again to his workplace, adding at least an hour to his commute.

“I don’t intend to get rid of my car, but for commuting, it’s part of overall cost-cutting,” he said.

“Cost of living was a problem before the fuel crisis, but the fuel’s certainly not helping.”

More people would alter their travel behaviour if fuel prices continued to rise, University of Sydney transport expert Geoffrey Clifton told AAP.

“We will start to see a prolonged shift in how people travel and we’ll see more people moving into public transport and leaving their cars at home, or doing things like downsizing their vehicle,” he said.

The US-Israeli war on Iran has triggered a global energy shock, sending oil prices soaring and driving a sharp rise in fuel costs.

It has also reignited discussions around fuel rationing, last implemented during the 1979 oil crisis when supply disruptions caused prices to surge and led to widespread shortages and higher petrol costs.

“That definitely led people to shift away from driving and also to buy smaller cars, so the very big classic family size cars gave way to more modern, smaller cars,” Dr Clifton said.

University student Ebony May decided this week to complete her studies from home rather than travelling to campus.

“It’s just a bit expensive, and then parking on top of that,” she told AAP.

“It is a shame because I do really enjoy going into campus, but sometimes you just think, I can’t really justify it.”

The 22-year-old business student believes many of her peers are struggling with the sudden surge in prices, although early trends across Australian cities indicate there are no major shifts in transport habits.

In Victoria, there has been a slight decline in usage across the Greater Melbourne declared road network, with midweek travel between March 9 and 20 down by one per cent.

There was a slight rise in Myki tap-ons across the city’s public transport network during the third week of March compared to the week prior.

Commuter numbers on Queensland’s public transport system, which has 50-cent fares, have risen by five per cent since March 1.

People are also turning to alternative options, including e-bike and e-scooter provider Lime, which reported a 10 per cent increase in trips in Sydney from the first week of March to the second.

Zaur Tomaev owns Port Melbourne Cycles and told AAP he had seen a slight uptick in bike sales in the past week.

The end of March is usually a quiet period for the shop, he said.

“I think if fuel prices will (keep) going up, many more people will start to commute and ride bikes instead.”

Communities are preparing for the worst as a reformed cyclone that has crossed borders gathers strength and heads towards the mainland for a third time.

Tropical Cyclone Narelle was upgraded on Thursday to a powerful category four system off the Western Australian northwest coast.

The storm is on track to make landfall late on Friday in the Shark Bay area as a category three system, which can produce gusts up to 224km/h.

Tourists have been told to leave the region, major roads have been closed, and evacuation centres have been set up ahead of Narelle’s arrival.

Shark Bay shire president Peter Stubberfield said volunteers were busy sandbagging ahead of a possible tidal surge in the tiny holiday town of Denham on the Peron Peninsula, 830km north of Perth.

“We’re preparing for the worst, which could be a category three cyclone, and we’re hoping for anything less than that,” he said.

Mr Stubberfield said tourists had been asked to leave the community of about 700 people, which has one road into it from the mainland, but some were refusing.

“There seems to be a bit of pushback for some people; some of the travellers don’t seem to be taking it seriously, which is a bit frustrating,” he said.

Narelle’s epic journey across northern Australia began when it made landfall in Queensland as a category four system on Friday, crossing the Cape York Peninsula.

It left a trail of power outages and flooding as it hit the NT as a category three by Sunday, forcing hundreds of people to evacuate.

After initially crossing northern WA as a tropical low on Monday, Narelle has gained strength in the Indian Ocean, as it headed southwest along the Pilbara coastline.

It is producing gusts up to 230km/h and is located about 365km northeast of Exmouth.

Tackle shop manager Barry Taylor said Exmouth residents had been hard at work “getting everything as locked down or strapped up and as safe as we can” ahead of Narelle’s arrival.

“Fingers crossed we don’t cop it too hard,” he said.

The system is set to move southeast after crossing the coast and pass as a tropical low east of Perth on Saturday, bringing showers and thunderstorms.

More than a week after arriving, Narelle is expected to finally leave Australia when it moves into the Southern Ocean early on Sunday.

Some homes in the NT town of Katherine have been inundated for the second time in a month.

The Katherine River was expected to peak just above the major flood level of 17.5 metres at the town bridge on Thursday.

The river rise, caused by heavy rain dumped by Narelle, flooded streets in the town and put water through low-lying properties, including on Gorge Road and in the nearby community of Kalano, mayor Joanna Holden told AAP.

Emergency shelters have been prepared to take evacuees and a portable field hospital has been set up after the town’s hospital was closed.

Homes and businesses in Katherine were inundated on March 7 after the river peaked at 19.2 metres, causing the town’s worst flooding in 28 years.

Ms Holden said the river was likely to sit at a major flood level of about 17.5 metres for some hours before receding.

It was too early to say if the worst of the new flooding was over, she said.

“Until that river drops right back down, any rain now is a risk.”

Residents have had to put their clean-up on hold, but prepared for renewed flooding with a major sandbagging operation by volunteers and defence force personnel sent in to assist.

Low-paid workers should receive a “sustainable” real wage increase that keeps them ahead of price growth but allows inflation to return to target within 15 months, the federal government says.

Labor repeated its call from 2025 for a pay bump that does not exacerbate inflation in its submission to the Fair Work Commission’s annual wage review.

Each year, the industrial umpire determines how much extra the more than 2.6 million Australians on minimum and award wages will get paid.

The commission decided in 2025 that, although inflation was on the way down in 2025, workers deserved a 3.5 per cent pay bump to help “catch up” with the fall in real incomes during the post-COVID inflation spike.

But the return of inflationary pressures and war in the Middle East has complicated the commission’s decision for 2026.

On one hand, unions argue low-paid workers are still behind from the previous inflation spike, calling for a five per cent increase.

Business groups warn a pay rise above inflation, which came in at 3.7 per cent in the 12 months to February, would only exacerbate inflation, which is already being fuelled by soaring oil prices.

Low productivity growth has reduced the rate at which wages can grow without causing a flow-through to consumer prices.

The government does not nominate a specific wage increase figure, but by recommending a real wage rise, in effect calls for a pay rise higher than inflation, which is forecast to climb as high as five per cent in the second quarter.

“Workers are doing it tough right now and that’s why we think they should get a sustainable real wage increase,” Treasurer Jim Chalmers said in a statement.

Employment Minister Amanda Rishworth said lower-paid workers were more exposed to unexpected financial shocks and experienced greater financial hardship.

“An increase to the minimum wage can also play a role in closing the gender pay gap given women are disproportionately represented in award-reliant jobs,” she said.

The Fair Work Commission will hand down its annual wage review decision in June.

The Iran war could push up the “neutral” interest rate level, requiring even more rate rises to get inflation under control, a Reserve Bank official says.

As the conflict in the Middle East sent oil prices and economic uncertainty sky-high, the RBA must keep a lid on inflation expectations, assistant governor Christopher Kent said in an address on Thursday.

Inflation data released by the Australian Bureau of Statistics a day earlier confirmed the central bank’s assessment that domestic conditions were already too tight, even before the outbreak of war.

Although headline inflation eased from 3.8 to 3.7 per cent in February, economists predict the consumer price index could surpass five per cent by June as the second-order effects of higher oil costs flow through the broader economy.

Markets expect the RBA to respond by lifting interest rates at least two more times, after hikes announced by governor Michele Bullock in February and March.

But how high the bank needs to lift the cash rate depends on the so-called neutral rate – the theoretical interest rate at which inflation will remain steady.

Dr Kent said the turmoil in commodity and other markets had led to tightening in financial conditions which, all else being equal, implied a decline in short-term neutral rates, meaning interest rates would not have to be raised as high to have the same effect.

“However, the supply shock also poses a risk to inflation and longer-term inflation expectations at a time when there are ongoing capacity pressures in Australia and several other advanced economies,” he told the KangaNews Debt Capital Market Summit in Sydney.

“This could both push short-run neutral rates higher and necessitate a more restrictive stance of policy.”

The longer the war dragged on, the larger the economic impact would be and the greater the risk of a market sell-off, he said.

Dr Kent reaffirmed the bank’s commitment to getting inflation under control, even though the energy crisis risks tanking the economy and higher interest rates could further exacerbate a downturn.

“A negative supply shock pushes up prices and leads to weaker economic activity, making us all poorer,” he said.

“Central banks cannot change that. But they can ensure that the initial rise in prices does not lead to a rise in longer-term inflationary expectations and extended inflationary pressures.”

The government is also trying to grapple with the impact of a prolonged war on Australia’s economy.

Treasurer Jim Chalmers on Wednesday said Treasury had modelled two scenarios for the economy, based on oil prices staying at $US100 a barrel for a short time or rising to $US120 a barrel for a longer time, both of which looked “pretty conservative now”.

The benchmark Brent crude price was just under $US100 a barrel on Wednesday amid conflicting claims of peace talks between the US and Iran.

Treasury was working on “some more challenging circumstances”, but modelling had yet to be completed, Dr Chalmers said.