Australian petrol price hikes and market jitters set to continue as Ukraine crisis worsens

theguardian.com:

Australians can expect higher petrol and gas prices and more volatile financial markets as a result of Russia’s aggression towards Ukraine but Australia’s economic rebound is unlikely to be derailed without a major escalation of hostilities, economists say.

Russian president Vladimir Putin ordered his nation’s troops into two renegade regions of neighbouring Ukraine on Monday (local time).

In response, investors trimmed their exposure to riskier assets. Stock markets in Asia fell, with Australia’s benchmark ASX200 index ending down 1%, while equivalent gauges in Hong Kong earlier lost as much as 3% and Tokyo’s 2%.

Oil prices rose 2.8% and touched seven-year highs on Tuesday. Saul Eslake, an independent economist, said rising crude costs were the most obvious initial effect of Russia’s actions against Ukraine.

“The world might assume that Russian oil will not be available to the market either because the Russians choose not to make it available or the West chooses not to buy it or in some other way impedes the trade in oil,” Eslake said.

Local petrol prices are already at record highs, reaching a national average of $1.791 cents per litre in the week to 20 February. In New South Wales on Tuesday, prices were averaging $1.816 a litre for E10 petrol, while in Melbourne E10 was $1.727 a litre.

As investors become more jittery, the Australian dollar also tends to fall against the US dollar, Eslake said. Since commodities are typically priced in the US currency, the price of oil in local terms will also be higher, once the delay of about a week feeds through.

Gas prices may also increase. While most of Australia’s liquefied natural gas (LNG) exports are based on long-term contracts to Asian customers, there may be a spike in regional