Treasury warns Australia to prepare for worsening economic impact of war

Australia's Treasury has warned the country to brace for the economic fallout from the Middle East conflict to intensify, with oil prices already spiking and threatening to stoke inflation. The warning, reported by multiple outlets including ABC News Australia and The Guardian Australia, comes as the Treasurer prepares to update the government's economic forecasts. The conflict has driven up global oil prices, raising the cost of petrol and diesel for Australian households and businesses. Treasury's analysis suggests the impact could worsen if the war expands or disrupts key shipping routes. The government is also exploring the possibility of building Australia's first new oil refinery in 60 years to reduce reliance on imported fuel. The refinery proposal is seen as a potential buffer against supply shocks, but it carries a large price tag and environmental concerns. For everyday Australians, the immediate effect is higher fuel costs, which feed into the price of goods and services. The Reserve Bank will watch the inflation data closely, as sustained price pressures could delay interest rate cuts. The Treasurer has stressed the need for contingency planning, while economists remain divided on whether the war will cause prolonged economic damage or a temporary spike.