|
|
|
Hedge Clippings | 11 September 2026 Oil closed above $100 again this week on the back of tit-for-tat strikes in the Strait of Hormuz, with Australia more exposed to the price of oil than almost any other developed economy. The RBA's deputy governor told the ABC that the country is "furious" about inflation for good reason, while in the US, strong job numbers and tonight's CPI figure are reshaping the case for a September hike. Oil is back above $100 on direct strikes against Iranian tankers, while Australia consumes more diesel per person than any other OECD economy Brent crude settled above $100 a barrel this week after US Central Command confirmed American forces destroyed Iranian oil tankers in the Gulf of Oman and near Kharg Island, Iran's primary export hub, while Iranian backed Houthis separately attacked Saudi energy facilities. It is Brent's first close above $100 since July, and Iran has vowed to intensify attacks if US strikes continue, a genuine escalation rather than the on-again, off-again diplomacy Hedge Clippings has tracked for months. US diesel hit a record US$5.94 a gallon on the news. The number matters disproportionately for Australia: per OECD data, Australia consumes 1.10 tons of oil equivalent of diesel per capita per annum, the highest of any OECD country and well above the 0.64 average, while CBA research puts Australian diesel consumption at 7.67 barrels per capita, roughly 80% higher than the US and eight times China's. Only around 13% of Australia's diesel is refined domestically, making it one of the world's largest diesel importers, with road transport, mining and agriculture together accounting for the bulk of demand. Every prior Hormuz escalation has fed directly into Australian headline CPI with a lag of one to two months, because diesel touches freight, food logistics and construction costs before it shows up in a fuel bowser, and the CPI. This is not a story to file under "offshore geopolitics." It is a direct input to inflation that the RBA will react to at its next meeting. "People are furious about inflation": Deputy Governor Hauser was unusually blunt, and the market still isn't fully buying the hawkish part RBA Deputy Governor Andrew Hauser told the ABC's 7.30 report on Tuesday that inflation is the economy's "one big problem" and that Australians are, in his words, "furious about inflation": "Everywhere I go, I hear cost, cost, cost, inflation, inflation, inflation, and that's our responsibility. We have to put that right." He named three specific forces keeping inflation elevated, the Middle East crisis, the global AI driven investment boom, and weakness in the economy's supply potential, and made the tightening bias explicit: "We could raise interest rates sharply, we could do it tomorrow," though he stressed the board isn't at that point because it still wants to protect employment gains and avoid an unnecessarily hard landing. Assistant Governor Sarah Hunter made similar remarks the same day, reinforcing the message rather than softening it. Headline inflation stood at 3.5% to July, trimmed mean has been at 3.6% for three months in a row, and all four major banks are now forecasting a hike by year end. The genuine tension is that this is some of the most explicitly hawkish language from the RBA all year, delivered three weeks ahead of the 29-30 September board meeting. Hauser's own framing supports that read Australia is "doing quite well" on unemployment and real household incomes, in his words, which is precisely the kind of language a central bank uses when it wants markets to take a hike seriously without actually committing the board to one. The next inflation number is due the day after the September meeting ends, meaning the board will vote without the data point markets might expect it to wait for. Coordinated hawkish messaging from two RBA officials in one day, with more interviews and commentary due next week, and ahead of a meeting where the board won't have the freshest inflation data, looks like a deliberate attempt to do some of the tightening through language rather than the cash rate itself. The RBA's next real lever is action, not more interviews. US Payrolls blew past forecasts, oil is surging, and tonight's CPI result lands five days before the Fed decides US non-farm payrolls for August, released on September 4th, rose 162,000 against a forecast of just 55,000, the strongest number since March and the first month of net job gains in five months, with unemployment steady at 4.1% and prior months revised up a combined 55,000. That will be the last major inflation data before the Fed's 15-16 September meeting, with economists expecting headline inflation to accelerate to around 3.4% annually on rising energy costs, while core CPI eases to roughly 2.4%. Fed Chair Kevin Warsh used his Jackson Hole speech last month to make clear he isn't ready to declare victory, in his words, recent readings "do not tell me that underlying trends have meaningfully improved." Rate hike odds have whipsawed for exactly that reason, and Brent's move back above $100 this week, combined with the payrolls number, is the fresh input markets are now pricing into a decision that looked closer to settled a fortnight ago. A strong jobs report and an oil shock landing in the same fortnight is the least convenient combination for a Fed trying to justify a pause. If tonight's CPI shows the energy pass-through Warsh has been warning about, the "coin flip" Hedge Clippings described a week ago tips meaningfully back toward a hike before next week's decision. News | Insights
Infrastructure in focus: The burning infrastructure issue from wildfires | Magellan Investment Partners August 2026 Performance News Bennelong Australian Equities Fund Quay Global Real Estate Fund (Unhedged) Active ETF (ASX:QGRU) Bennelong Concentrated Australian Equities Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
