Drivers are being cautioned to prepare for the cost of fuel to rise after the assassination of Iranian General Qassem Soleimani sent wholesale prices skyrocketing.

The shock killing of General Soleimani on January 3 pushed the price of Singapore Mogas 95 up by “about $3.5 a barrel” according to NRMA spokesperson Peter Khoury.

Sinagpore Mogas 95 is the benchmark used by Australia to set refined petrol prices, and according to the ACCC its price accounts for 50 per cent of the bowser price, making it “the largest component of the retail petrol price”.

Speaking to The New Daily, Mr Khoury said a $3.5 per barrel hike in the price of Singapore Mogas 95 will translate to an increase of 2.5 cents to 3 cents a litre at the pump.

“Unfortunately we should brace ourselves for an increase,” he said.

However, it could take between seven and 10 days before the higher international refined petrol prices flow through to consumers’ wallets.

“Having said that, that was the initial reaction to the attack. If the market stabilises, and certainly if the tension between the US and Iran eases a bit and the market stabilises, then hopefully we won’t see that price pass on,” Mr Khoury added.

Instability make prices difficult to predict

Whether or not petrol prices will stay at their current inflated levels for long is difficult to predict because “the world of oil prices is so volatile”, Mr Khoury said.

If you had told me a week ago we’d be talking about prices going up 2.5 to 3 cents a litre because of an assassination in Baghdad, no one could have predicted that.

“The things that cause these increases are often things that come out of nowhere because we’re dealing with one of the most volatile parts of the world – Go back to September; no-one had foreseen the attack on the Saudi refinery which saw prices increase dramatically.”

Those attacks on two plants operated by Saudi Aramco took 5 per cent of the world’s daily oil production offline.

Energy Minister Angus Taylor was forced to call for calm after some analysts predicted the attacks could push wholesale petrol prices up by 50 per cent.

Australian drivers were spared increases of that magnitude, but in some places were paying as much as 173.9 cents a litre – 40 cents a litre more than the average wholesale price and the largest profit margins retailers had ever charged.

Yemen’s Houthi rebels – who are aligned with Iran – claimed responsibility for the attacks, but both Saudi Arabia and the US have since accused Iran of supplying the rebels with the weapons used to bomb the Saudi Aramco facilities.

Iran has rejected those claims.