This research note examines how the global Iran energy crisis has impacted on the Australian economy, and how its effects are likely to play out across the remainder of 2026. The conflict in the Middle East has caused the greatest disruption to global energy markets in half a century. Utilising the most up-to-date economic indicators, it tracks crisis effects across energy prices, inflation, business activity, household spending and the labour market. 

Key findings

• Australia’s economy is highly-exposed to the global energy crisis, and even with an imminent end of military hostilities in the Gulf will face a long tail of negative impacts over the remainder of 2026.
• As fuel costs are passed along supply chains, second-order effects should be expected in coming months that will drive inflation higher, further weaken consumer confidence and exacerbate cost pressures on business.
• Highly-exposed industries report that investment levels have already been cut back due to costs pressures and uncertainty. 
• The Australian economy will suffer from high inflation and low growth for the remainder of 2026.