As the United States and Iran edge closer to a deal that could reopen the Strait of Hormuz, uncertainty still hangs over global markets, including in Australia.
Market players Down Under are hopeful for a truce from the conflict in the Middle East that could effectively put an end to higher oil prices globally. Meanwhile, US President Donald sent conflicting signals on Sunday Stateside, or Monday in Australia, telling representatives "not to rush into a deal."
That same day, by way of social media, Trump said negotiations — which would lift the US blockade of Iranian ports with Iran committing to eliminating its highly enriched uranium — are "proceeding in an orderly and constructive manner."
For Australia, the stakes are largely economic. A reopening of the Strait of Hormuz, one of the world’s largest oil shipping routes, would ease supply pressures and lower fuel costs, potentially reducing inflationary pressure and, in turn, supporting the case for lower interest rates over time.
But market experts say nothing is certain, and Australians shouldn’t expect immediate relief at the pump just yet.
"We've heard a few times about the Strait potentially opening and then we've all been quite excited by that and in the end that hasn't actually occurred," Madeline Dunk, economist at ANZ, told Australian Broker. "So I think we're all just in wait and see mode at the moment.
"If the Strait were to open and the conflict were to deescalate, that would be positive for the Australian economy," she added.
The outbreak of conflict between the US, Israel and Iran in March sent shockwaves through global markets and governments, leaving the whole world, including Australia, on high alert. That same month, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser spoke on The Conversation’s Politics with Michelle Grattan podcast, saying that the conflict is pushing global oil prices higher and keeping inflation hotter than expected.
March's consumer price index (CPI) confirmed the central bank's suspicions with headline CPI at 4.6% for the 12 months ending in March, and trimmed mean inflation at 3.3%. Both figures were above the RBA's target inflationary range of 2% to 3%.
Since then, the conflict has done little to relieve price pressures. In fact, it has added to them, raising fuel and other commodity prices globally, including in Australia.
"The Strait opening would help to ease some of that pressure," Dunk said. "But it would also take time. It's not just a tap that turns on."
The economist said ANZ expects the oil market to "remain quite structurally tight for a while because there's been infrastructure damage.
"So it's not a quick return of oil to the global market," Dunk explained. "We're talking like a long process, around six months to a year. It's something that's going to be a slow process.
"And we talk about oil and that is the main thing that most people are focusing on. But, of course, there's been a lot of other products impacted by the Strait being shut and the conflict," she added. "Things like fertiliser, plastics, the builders, PVC pipes, all of these things are being affected by these disruptions at the moment. So it puts upward pressure on inflation and prices are likely to stay high for some time."
The RBA has raised the official cash rate (OCR) three times in 2026, pushing the current rate to 4.35%, and piling more pressure on mortgage holders and investors nationwide as borrowing power shrinks and living costs climb.
ANZ maintains that the RBA will hold the current OCR at its June meeting, bringing all of Australia's Big Four banks into alignment, after National Australia Bank (NAB) updated its forecast earlier this month.
"Our view is that activity is going to slow down quite sharply in the Australian economy over the coming months," Dunk said. "The rise in the unemployment rate supports our view that the labor market is going to soften. And we can see confidence is very weak at the moment. So we do expect that household spending will be quite slow."
Attention now turns to Wednesday's upcoming CPI print. But Dunk warned inflationary pressures are unlikely to ease in the near term.
"It's definitely our view that inflation's going to remain elevated above target for some time," she said.
