Highlights
- Crude prices dropped sharply overnight, setting the ASX up for a strong open.
- Fuel is a major operating cost for airlines, transport companies, retailers and miners.
- The Reserve Bank has identified higher fuel prices as a key driver of inflation, linking the oil move to the interest rate outlook.
A sharp fall in global oil prices has put Australia's largest fuel users back in the spotlight. Crude slid overnight after the Democrats won control of the US Congress and as markets weighed signs of diplomacy between Washington and Tehran. For Qantas Airways
, where jet fuel is among the biggest costs in the business, the move raises an obvious question about whether some of the recent cost pressure may start to ease.
The broader ASX is also set to open sharply higher, following a strong session on Wall Street. The combination of cheaper energy and firmer global equities gives the local market a different tone from the previous session, when the market closed lower ahead of the US election result.
Why fuel matters so much
For airlines, fuel represents a large share of operating costs and can swing earnings quickly. The same logic applies, to varying degrees, to freight an...