Global recession warning as oil crisis hits key Australian industries

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Australia could face a sharp rise in business failures and a possible recession if the global oil crisis continues, a new CreditorWatch report warns.

Oil prices have surged about 50% since recent conflict in the Middle East, briefly hitting around US$117 per barrel and now sitting near US$100. Experts say if prices stay above US$125–150 for months, recession risks increase significantly.

The transport sector is already under pressure, with fuel making up around 40% of operating costs. More than 7% of road freight businesses have closed over the past year.

Rising fuel costs are also flowing into other industries, including agriculture, construction, manufacturing and retail. Many businesses may be forced to pass these costs on to customers.

The report says the outlook depends on how long the conflict lasts. A quicker resolution could ease pressure, but prolonged high oil prices may trigger more closures, especially among small and medium businesses.

Higher interest rates are adding to the strain. Economists warn the combination of rising borrowing costs and fuel prices is increasing the risk of an economic downturn.

The Reserve Bank of Australia is monitoring the situation closely, as inflation could climb above 5% if pressures continue.

For now, businesses are being urged to prepare for ongoing uncertainty, with the biggest risk tied to how long global oil supply disruptions last.

Source : SkyNews

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