The conflict in the Middle East is pushing construction costs up across Australia. If you are planning a renovation, extension or new build in Canberra, here is what is actually happening, what it means for your project, and how to plan around it.
I am going to give you the straight facts here. No panic. No spin. Just what we are seeing on the ground as builders, and what the industry data is telling us.
Update - 30 April 2026
Eight weeks in, the Strait of Hormuz remains effectively closed. Brent crude is back above US$107 per barrel after another round of US-Iran peace talks stalled, with daily commercial transits through Hormuz still well below pre-conflict levels (around 19 vessels per day, compared with roughly 129 before late February). Diesel volatility continues to dominate site costs, even though the federal fuel excise cut and the zero-rated heavy vehicle road user charge are helping a little.
Locally, two things are now top of mind for any Canberra build. First, the ACCC's most recent weekly monitoring report shows retail diesel was only about 10 cents per litre lower across the five largest cities by mid-April compared with 31 March, even with the excise cut. Pass-through has been slow because international refined diesel benchmarks spiked as the cut took effect. In short: the relief at the bowser is real, but smaller than the headline 32 cents per litre suggests, and it is not yet flowing fully into freight and supplier surcharges.
Second, NCC 2025 transition starts in the ACT on 1 May 2026. Builders can choose either NCC 2022 or NCC 2025 for projects with Building Approval between 1 May and 1 November 2026. From 1 November onwards, NCC 2025 is mandatory. Master Builders ACT has flagged the transition could add anywhere from $14,000 to $55,000 to a new home, on top of the conflict-driven cost pressures already in the system. If you are planning a build in the next twelve months, this is a real conversation to have with your builder up front.
What we are doing at Rentoule Projects. Holding fixed-price contracts. Locking in supplier validity windows wherever we can. Reviewing freight and fuel allowances on every quote. And being upfront with clients about which decisions matter most when costs are moving like this.
Update - 6 May 2026
The official numbers are starting to land, and they are uglier than the pre-conflict trajectory suggested. The ABS Producer Price Indexes for the March 2026 quarter (released this week) show input costs to house construction up 0.6% in the quarter and 2.5% year on year. Electrical equipment is up 5.0% in the quarter alone (6.3% year on year), and concrete, cement and sand are up 1.7% in the quarter. Master Builders Australia have flagged that these March quarter numbers do not yet fully include the impact of the Middle East crisis, which means more upside is likely in the June quarter release.
Diesel and fuel surcharges are still the dominant cost story. ABC News reported builders absorbing diesel rises of around $1.20 to $2.00 per litre over a two month period, with some pre-mixed concrete suppliers lifting prices 85 to 120 percent and plastic piping up 36 percent. Several suppliers reintroduced or increased fuel surcharges from 1 May. The relief from the federal excise cut has been smaller and slower than the headline numbers suggested.
Locally, two regulatory changes hit on 1 May 2026 that affect every ACT residential project. The ACT notified Building Determination DI2026-56, setting new transitional rules for the ACT Appendix to the Building Code, with Schedule 1 as the default and Schedule 2 as an early-adoption option until 30 April 2027. The plumbing side moved with it: DI2026-55 adopted the 2025 edition of the Plumbing Code of Australia, with a transition window to 30 April 2027 where projects can nominate either NCC 2022 or NCC 2025 (but not mix). For residential builds, the practical thing to know is that water heater options now have specific rules tied to the ACT's gas phase-out: solar, heat pump, gas (only where not prohibited and only as the sole gas water heater), or electric resistance.
What we are doing at Rentoule Projects. We have been pulling apart supplier quotes line by line, asking suppliers to separate base material price from fuel surcharges so we can claw back when fuel normalises. We are nominating NCC and PCA editions deliberately at quoting stage rather than letting them default. And we are still holding the line on fixed-price contracts. The volatility is real but it is not a reason to push pricing risk onto homeowners.
Update - 13 May 2026
The Federal Budget landed on Tuesday night and it has real implications for our industry, on top of the still-live conflict cost pressures. The headline construction items in the 2026-27 Budget: $2 billion for housing-enabling infrastructure (sewerage, roads, water) to unlock land for new homes, $42.7 million to make Australian Standards referenced in legislation free to access (removes a long-standing compliance cost on small builders like us), and a $500 million EPBC environmental approvals reform package including $105 million specifically for housing-related approval improvements. HIA has called the supply reforms welcome but flagged that the negative gearing and CGT changes from 1 July 2027 (limited to new builds only) are projected by Treasury itself to reduce new home supply by around 35,000 over the decade. Net effect on residential demand in Canberra: unclear for now. I will write a separate article on what the Budget actually means for Canberra renovators later this week.
On the Middle East situation, the picture has shifted again. A US-Iran ceasefire that had held since 8 April broke down on 7-8 May when US naval forces and Iranian forces exchanged fire in the Strait of Hormuz, with the UAE also reporting Iranian missile strikes on Fujairah. Brent crude jumped close to US$103 per barrel on Tuesday before settling around US$100. The ACCC's 8 May weekly monitoring update (the ninth in the series) was actually more reassuring on the domestic side: international refined diesel benchmarks have stabilised over the past fortnight and retail diesel prices have decreased in Australian capital cities. So we have a situation where the geopolitical risk is escalating again but the actual prices at the pump have flattened or eased slightly. That can change quickly if Hormuz blocks again.
Worth flagging: the fuel excise cut expires 30 June 2026. The 32 cpl combined reduction (federal excise plus state GST forgone) has been keeping diesel prices below where they would otherwise be. Unless the federal government extends it in the Budget context (no announcement yet), diesel will jump 32 cpl overnight on 1 July, regardless of what is happening in the Middle East. Build contracts that complete in July and August should price in this risk.
What we are doing at Rentoule Projects. Holding our fixed-price approach. Building the 30 June excise expiry into pricing assumptions for any project that will have material deliveries through July to September. Watching the Budget housing measures play out before changing our advice to clients on timing. And reminding clients (and ourselves) that the cheapest path is still a well-planned build with locked scope, not chasing day-to-day market noise.
Update - 20 May 2026
The supplier surcharges have arrived in writing. The ABC reported this week that the conflict-linked cost increases I have been warning about for two months are now landing as formal price notices on residential projects. Gyprock suppliers have applied fuel levies of 3.5% to 4.9%. Waterproofing has a temporary 7% surcharge. Concrete is now carrying fuel levies of up to $12 per cubic metre. Insulation suppliers have lifted by 4.9%. PVC (used in conduit, waste lines and membranes) is projected to rise around 30%. The Housing Industry Association is publicly estimating the conflict-related increases add roughly A$4,000 to a typical new home build, and that is on the lower-cost kit-home end of the market. On a custom Canberra renovation with significant plumbing, waterproofing and PVC content, the number is materially higher.
RICS sentiment confirms this is industry-wide, not isolated. The latest RICS Australia Construction Monitor reading for cost of materials is +86, the highest the survey has captured in this country. Twelve-month expectations for material costs have jumped to +77 (from +52 last quarter), and expectations for material shortages have nearly doubled to +49 (from +27). That is not a couple of suppliers being opportunistic. That is the industry pricing in a sustained period of input cost pressure.
On the fuel side, the ACCC's 10th weekly report (15 May) is the calmest one yet. The 32 cpl excise cut has now flowed through to retail in the vast majority of locations, Brent crude eased to around US$108 (down 11% on the week) and Singapore gasoil dropped 5%. Retail diesel in Canberra is sitting around $2.23 per litre, down 6% on the week. That is genuine relief at the pump but it does not change the materials picture above, because the surcharges already in the system reflect input costs from weeks ago, not today's pump price. There is also a lag between cheaper diesel and cheaper deliveries, because freight contracts get repriced quarterly, not weekly.
One more piece worth knowing about. On 18 May the Fair Work Commission issued its first Road Transport Contractual Chain Order, which formally requires transport rate adjustments through the contractual chain while the national terminal gate price for diesel sits above $2.00 per litre. In plain English: trucking companies now have a regulated mechanism to pass diesel costs up the chain to their customers, which includes our material suppliers, who pass it to us. This is not a one-off surcharge anymore, it is a formalised pass-through mechanism, and it stays in force until diesel falls back below $2.00 nationally.
What we are doing at Rentoule Projects. Three things changed in how we are quoting this week. First, every fixed-price quote we send now explicitly lists which materials carry supplier fuel levies and how those will be handled if the levy changes between quote and order. Second, supplier price validity windows have tightened to 14 days from 30 days on most line items, and we are now ordering long-lead materials immediately on contract signing rather than waiting for the construction program to call for them. Third, on any project with significant PVC, waterproofing or insulation content, we are sourcing two written supplier quotes rather than one, because the spread between suppliers has widened noticeably. None of this changes the fixed-price commitment to clients. It changes how I protect that commitment behind the scenes.
Update - 27 May 2026
The picture this week is split. Crude prices have eased meaningfully on US-Iran peace-talk progress, but the cost pass-through to materials is still flowing the other way. Brent dropped to around US$96.30 per barrel on 26 May, down roughly 11% on a fortnight ago and the lowest level since the conflict began. The trigger was reporting that US-Iran talks have advanced on a framework that could reopen the Strait of Hormuz, although the strait itself is still operating at around 10% of normal commercial throughput per Bloomberg's 17 May tracker. Iran has separately floated a US$1 per barrel transit toll concept, which the IMO has publicly rejected as inconsistent with freedom of navigation. The takeaway: lower crude does not yet equal lower materials, because the surcharges already in supplier price books reflect input costs from weeks ago and freight contracts repriced quarterly.
The April inflation print and ABS Business Pulse data put numbers on what we have been seeing on quotes. Headline CPI eased to 4.2% in April year-on-year, with automotive fuel down 7% month-on-month off the back of the 32 cpl excise cut. More telling for our industry is the ABS Business Pulse released on 26 May: 86% of Australian construction businesses reported negative impact from fuel prices, and 56% reported negative impact from freight and delivery costs. Across all sectors, 72% of businesses reported fuel-related impact. That is not a few suppliers being opportunistic. That is industry-wide cost pressure being acknowledged in government statistics for the first time.
ACT-specific signal: construction work done in the territory for the March quarter came in at $1,071.3 million, down 10.3% on the December quarter but up 4.8% year-on-year (ABS Construction Work Done preliminary release ). The quarter-on-quarter softening is real but the annual picture is still up, which is consistent with what we see on the ground in Canberra: trade availability has eased slightly off the late-2025 peak but is not loose, and material lead times have stabilised rather than recovered.
What we are doing at Rentoule Projects. Holding the line on the protective measures put in place over the past month: itemised fuel levies on quotes, 14-day supplier price validity, immediate long-lead ordering, and dual quoting on PVC, waterproofing and insulation. We are not releasing those yet, because the freight cost pass-through mechanism does not automatically wind back when crude eases, and the FWC's Road Transport Contractual Chain Order remains in force while terminal gate diesel sits above $2.00 per litre. If the next two ACCC weekly reports continue easing and the Hormuz throughput meaningfully recovers, we will reassess. Until then, the structures stay.
Update - 3 June 2026
Two new cost pressures landed this week that materially change July quoting. The first is ocean freight. War-risk insurance for vessels transiting the Strait of Hormuz is now being quoted at roughly 4 per cent of ship value for a 7-day policy, against pre-crisis rates around 0.001 per cent. That is a 4,000-fold increase and it is showing up in global container spot rates: China to US East Coast is up 75 per cent on pre-conflict levels, and China to North Europe is up 51 per cent (The National, 3 June 2026 ). For a Canberra renovation or build, the items most exposed to ocean freight are appliances, tapware, lighting, designer tiles, stone slabs, glass, and any imported finish. Expect supplier re-quotes on those lines through June and July.
The second is labour. The Fair Work Commission's annual wage review handed down on 2 June set the minimum wage up 5.97 per cent and award wages up 4.75 per cent, effective 1 July 2026. Most of our trades are award-influenced even where they are not strictly on award rates, which means labour rates on most quotes priced from July onwards need to factor in the increase. For a $400k renovation where labour is typically 35-45 per cent of total cost, a 4.75 per cent labour lift adds roughly $7,000 to $8,500 to the underlying cost before margin. That is real money and it has to be priced into any quote with construction starting after 1 July.
On the conflict itself, the picture remains volatile. US strikes in Iran on 28 May pushed Brent briefly higher before easing back. Strait of Hormuz transits are reportedly recovering (around 28 vessels in 24 hours per Iranian state media, with US Navy providing navigation guidance to non-Iranian ships), but the war-risk insurance number above tells you the market does not yet believe the recovery is durable. Iran is also still floating its US$1 per barrel transit toll proposal which the IMO continues to reject.
What we are doing at Rentoule Projects. All protective measures stay in place from the previous updates. Three additions from this week: First, on any project with construction starting after 1 July, we are explicitly factoring the FWC award increase into labour line items rather than absorbing it through margin. Second, on any project with imported appliances, tapware, lighting, stone or designer tiles, we are confirming both price and ETA with the supplier within 14 days of contract signing, because ocean-freighted items are where the biggest re-quote risk sits right now. Third, we are advising clients with projects beyond October to budget an additional 2-4 per cent contingency on imported finish lines as a working assumption until shipping costs normalise. None of this changes the fixed-price commitment to existing contracts. It changes how I protect that commitment on new ones.
Update - 10 June 2026
Fuel prices have come back close to pre-conflict levels. The ACCC's 5 June weekly fuel monitoring report shows daily average retail prices across the five largest cities at 173.3 cpl for petrol and 209.3 cpl for diesel on 3 June. That is petrol down 12.2 cpl on the week and 83.9 cpl below the 31 March peak, and diesel down 13.2 cpl on the week and 113.1 cpl below the 31 March peak. The ACCC's own framing is that retail prices are now near pre-conflict levels (ACCC weekly fuel report, 5 June 2026 ). International refined benchmarks have also eased about 7 to 9 per cent on the week.
The Hormuz picture is improving too, but not durably yet. The US Energy Secretary said on 9 June that Strait of Hormuz vessel traffic is increasing, sending Brent crude down close to 4 per cent on the day. The US Energy Information Administration is now forecasting Hormuz oil shipments to resume in Q3 2026 with full recovery only in 2027. JP Morgan analysts have suggested Brent could stabilise around US$100 for the rest of 2026 if the strait reopens. The war-risk insurance premiums I flagged last week are still elevated, so the market is still pricing the recovery as fragile rather than locked in.
What has not changed: the 32 cpl fuel excise cut still expires on 30 June 2026. Unless the Federal Government extends it, retail diesel jumps 32 cpl overnight on 1 July regardless of where crude or freight has settled. Any project with material deliveries through July, August and September should still have that built into the quoting assumptions. The fuel relief at the bowser today is partly the excise cut. When it lapses, a chunk of it comes straight back.
One more thing worth knowing, even though it is not conflict-related. The ACT 2026-27 Budget (handed down 9 June) introduced a temporary 50 per cent reduction in the Lease Variation Charge for eligible Missing Middle housing developments, a Canberra House Pattern Book project, and a streamlined approval pathway for compliant designs (MBA ACT media release, 9 June 2026 ). Stamp duty is being abolished for all first home buyers from 1 July and extended permanently to new unit-titled owner-occupier purchases. None of that offsets the conflict-driven cost pressures, but for any Canberra owner thinking about multi-unit development it materially changes the financial picture. I have written more on this in our Missing Middle article .
What we are doing at Rentoule Projects. Holding all protective measures already in place: itemised fuel levies on quotes, 14-day supplier price validity, dual quoting on PVC, waterproofing and insulation, FWC award increases factored into July-plus labour lines, and 2-4 per cent contingency on imported finish lines for projects completing past October. We will not release these yet because the fuel excise cliff on 30 June is still a real risk, the Hormuz recovery is not locked in, and freight contracts reprice quarterly so the easing at the pump has not yet flowed through to material delivery costs. If the ACCC's next two reports continue easing through the excise expiry, we will reassess.
Update - 17 June 2026
The macro picture has shifted materially in the last week. The conflict is de-escalating, oil is back below pre-conflict levels, and the Strait of Hormuz recovery is now expected by end of July rather than Q3. Brent crude fell below US$80 per barrel after a reported US-Iran peace agreement (CNBC, 16 June 2026 ). As at 17 June Brent was trading around US$78 to $83 per barrel intra-day. For context, Brent was around US$107 per barrel in late April and around US$96 in late May. The pre-conflict baseline (mid-February 2026) was around US$72 per barrel, so we are roughly 10 to 15 per cent above pre-conflict but down 25 to 30 per cent from the peak.
Forecasters have repriced the outlook downward. Fitch reduced its near-term oil price assumption from US$90 to US$80 per barrel and its average 2027 forecast from US$80 to US$75 per barrel following the deal (The Middle East Observer, 17 June 2026 ). Analysts now expect Gulf oil exports to return to pre-conflict levels by the end of July 2026, a month earlier than previously anticipated. If those forecasts hold, the worst of the freight and fuel pressure on Australian construction is now behind us rather than ahead of us.
The 30 June excise cliff is still in the diary. The 32 cpl federal fuel excise cut is still scheduled to expire on 30 June 2026. The Federal Government has not announced an extension as at the time of writing. Even with crude falling, retail diesel will jump approximately 32 cpl on 1 July when the excise reverts. Recent supplier surcharge notices already reflect the conflict premium, so quoting assumptions for projects with material deliveries through July, August and September still need to factor in the excise reversal as a near-certain cost lift.
Industry data continues to point to ongoing pressure. WT Partnership's June 2026 Construction Market Conditions Report reiterates national construction cost escalation staying above 5 per cent over the next three years, and flags detached housing as more exposed to Middle East-related cost impacts (WT Partnership, June 2026 ). HIA's latest note highlights ongoing housing undersupply, with Australia needing more than 250,000 homes per year against 196,000 commenced last year (HIA newsroom, June 2026 ). The fuel and freight shock is easing but the underlying trade and material pricing pressure from chronic undersupply is not going anywhere.
What we are doing at Rentoule Projects. Starting to wind back some protective measures, carefully. Three changes from this week. First, on quotes priced from this week onwards, we are reducing the imported finish line contingency from 2 to 4 per cent down to 1 to 2 per cent, on the basis that Gulf oil exports look likely to be back to pre-conflict levels within 6 weeks. Second, we are maintaining the FWC award increase factor on July-plus labour lines because that is a one-way step-change unrelated to the conflict. Third, we are keeping the 30 June excise cliff factored into July-September project quotes because that is still a real risk regardless of what crude does. If the next two ACCC weekly reports continue easing AND there is no government extension of the excise cut, supplier surcharges will likely reset down through July and August. We will reassess again at that point.
Update - 24 June 2026
The 30 June excise cliff I flagged last week is now a slope, not a cliff. On 20-21 June the Federal Government extended the fuel excise relief at half-rate: 16 cpl off petrol and diesel from 1 July to 2 August, then the relief fully expires. The Heavy Vehicle Road User Charge is also reduced by 16 cpl for the same period (Minister for Infrastructure media release, 20 June 2026 ). The headline saving on a typical 65 litre fill is about $11. The change for builders is that diesel does not jump 32 cpl overnight on 1 July - it jumps 16 cpl on 1 July, then another 16 cpl on 2 August. Better than the original cliff scenario but still a real cost lift on materials and subcontractor delivery costs from August onwards.
Brent crude has continued to ease, now trading below US$75 per barrel. The National reported Brent slipping below US$75 on 24 June as Hormuz transit recovers, down from US$78 to $83 intra-day a week ago and the US$96 to $107 highs of late May (The National, 24 June 2026 ). The pre-conflict baseline was around US$72, so Brent is now within roughly 4 per cent of pre-conflict. The fuel-and-freight shock from the conflict is essentially over as a near-term cost driver, though the second-order surcharges that suppliers added during the peak will take longer to roll back.
The first hard data on cost flow-through is now in. ABS CPI for May 2026 (released this week) shows new dwelling prices up 0.9 per cent month-on-month and 5.6 per cent year-on-year. The ABS explicitly notes that project home builders have been lifting base prices to pass through fuel surcharges and higher material costs (ABS CPI release, May 2026 ). Housing inflation overall is running at 6.5 per cent year-on-year, electricity is up 21.1 per cent year-on-year now that the temporary rebates have ended. This is the first official confirmation that the May 2026 supplier surcharge wave is sticking in residential building prices nationally, not just in the trade media reports.
HIA has confirmed a 9 per cent increase to building indemnity insurance eligibility and job profile limits from 1 July 2026 , to keep pace with rising construction costs (HIA newsroom, 23 June 2026 ). For builders running fixed-price contracts on larger residential projects, this is the kind of detail worth checking with your insurer before 1 July to confirm any upcoming project sits inside the updated eligibility brackets.
What we are doing at Rentoule Projects. First, repricing July-September quoting assumptions to use the new 16 cpl half-extension rather than the full 32 cpl reversal. Reduces the diesel surcharge factor in those quotes meaningfully. Second, contacting our indemnity insurer this week to verify the updated job profile limits sit comfortably above our current and upcoming contract values. Third, holding the imported finish line contingency at 1 to 2 per cent for now (down from 2 to 4 per cent last week). Fourth, communicating with clients on existing fixed-price contracts that we are NOT raising prices despite the ABS data showing project builders nationally passing through costs. The fixed-price commitment holds. New contracts from this week onwards reflect the updated mix.
Update - 1 July 2026
The 1 July fuel excise transition is now live. As flagged last week, the federal excise cut has stepped down from 32 cpl to 16 cpl on petrol and diesel, and the Heavy Vehicle Road User Charge is also reduced by 16 cpl (IndexBox on ACCC 16th weekly fuel report, 26 June 2026 ). The next step-down (removing the remaining 16 cpl) is scheduled for 2 August. National average diesel was tracking at 184.77 cpl in the 28 June FuelRadar report before the excise change took effect, so expect retail diesel to lift 15 to 17 cpl at the pump this week. Freight surcharges from suppliers will lag but reflect this in July invoicing.
Brent crude is holding at pre-conflict levels or below. Reported at around US$71.99 to $72.51 per barrel through the past week, essentially at or slightly below the pre-conflict baseline of US$72 (ProtoThema, 27 June 2026 ). Brent fell close to 11 per cent over the week to 27 June as Hormuz traffic recovered. This is a genuine unwind of the conflict-driven cost pressure that was hammering quotes six weeks ago.
But the Hormuz recovery is not clean. Two watchpoints for the next four to six weeks. First, maritime unions and shipping companies have confirmed they will keep the Strait of Hormuz classified as a "warlike operations area" until at least 9 July (Deutsche Welle, 1 July 2026 ). That designation sustains elevated shipping labour and insurance costs regardless of crude prices, which flows into imported construction materials over the following weeks as sea freight contracts reprice. Reuters also reports Hormuz crude cargo throughput is still around half of pre-conflict levels with backlogs of hundreds of vessels that could take weeks to unwind (Reuters, 30 June 2026 ). Second, Iran is reportedly pushing for international recognition of its control over Hormuz and may begin charging ships for passage after the current 60-day toll-free period ends in mid-August (Reuters, 1 July 2026 ). If that toll materialises, freight costs on affected routes rise structurally rather than temporarily.
Steel: preliminary anti-dumping duties on Chinese and South Korean plate steel. Australia's Anti-Dumping Commission has issued a Preliminary Affirmative Determination in Case 688 covering flat-rolled plate steel from China and South Korea (specifically, plate 4.75mm or thicker and 600mm or wider, not in coils) (Anti-Dumping Commission Case 688 ). For residential builders, the direct impact is limited because most residential steel is coil-form sheet (roofing, cladding, framing) rather than plate. But it is a signal that Australian steel pricing is under upward pressure from trade policy, on top of the fuel and freight pressure. Worth confirming with structural steel suppliers whether any plate steel components (heavier lintels, structural bracing) are affected before signing contracts with those inclusions.
What we are doing at Rentoule Projects. First, holding the July quoting assumptions I set two weeks ago (16 cpl excise still applies until 2 August, then full expiry). Second, watching the Hormuz "warlike operations area" review scheduled for 9 July as the trigger for any further contingency adjustment. Third, calling structural steel suppliers this week to confirm no plate steel exposure on our current contracts. Fourth, no changes to existing fixed-price contracts. The trajectory is favourable and I expect to fully release the imported finish line contingency by mid-August if the Hormuz recovery holds and no Iran transit toll is introduced. For clients considering signing a new contract now, this is a genuinely better window than any point in the last three months.
Update - 8 July 2026
The trajectory has reversed this week. Fresh US-Iran escalation has pushed oil back up and reintroduced Hormuz supply fears. Al Jazeera reported on 8 July that oil surged after US strikes on Iran, reversing the return to pre-war prices (Al Jazeera, 8 July 2026 ). Brent crude is back above US$76 per barrel, up from the US$71.99 to $72.51 pre-conflict-baseline range last week (India Today, 8 July 2026 ). The US also revoked its Iranian oil sales waiver, structurally tightening global supply.
Last week I said the fuel-and-freight shock was essentially over as a near-term cost driver. This week I have to walk that back. The Hormuz "warlike operations area" designation held past 9 July as expected, and combined with the fresh escalation the market is repricing risk upward. If the situation continues to deteriorate through July, expect freight and insurance surcharges to reset upward through August. Not to April-May peak levels yet, but the clean unwind story we had a week ago is not clean anymore.
Australia's diesel stock buffer is worth flagging. The Oregon Group reported on 2 July that Australia is currently sitting on 37 days of diesel stock, with Western Australia specifically down to about 29 hours of local supply (The Oregon Group, 2 July 2026 ). The Federal Government has extended a measure allowing suppliers to hold 20 per cent less petrol and diesel in reserve until September if additional fuel is released into domestic markets. What this means practically: if Hormuz supply is disrupted for weeks rather than days, Australian retail diesel could see step-changes larger than the excise expiry alone would suggest. Not a base case, but a real risk for August-September project deliveries.
UBS repriced downward before the escalation. On 2 July UBS cut its Brent forecasts on improved Hormuz oil flows (Reuters, 2 July 2026 ). That forecast is now stale. Watch for a re-cut in the coming week if the 6-8 July escalation persists.
An economist quoted by PerthNow this week put the Iran-war impact on residential build costs at around 1 per cent so far (about a few thousand dollars on a typical build), rather than the up-to-10-per-cent scenarios feared earlier in the conflict (PerthNow, 5 July 2026 ). Consistent with what we have been seeing on quotes. Worth mentioning to clients who have absorbed news headlines suggesting worse.
What we are doing at Rentoule Projects. First, HOLDING the imported finish line contingency at 1 to 2 per cent rather than releasing it as I planned to do mid-August. The reversal this week rules out the release until we see whether the escalation persists or contains. Second, keeping the 30 June to 2 August excise transition assumption unchanged (still 16 cpl relief until 2 August, then full expiry). Third, reaching out to our imported appliance and finish suppliers this week to check whether any July orders have been re-routed or delayed due to Gulf shipping avoidance (CMA CGM has said it will not send ships back to the Gulf for now). Fourth, no changes to existing fixed-price contracts. Fifth, for clients considering signing a new contract this week, my honest read is the window is still reasonable but no longer as favourable as it was a week ago. I would not delay signing to try to time a better window because volatility is now working in both directions.
Update - 15 July 2026
Hormuz traffic has collapsed to near-standstill after fresh US-Iran strikes. Anadolu Agency reported on 9 July that only 14 commodity vessels crossed the strait on Wednesday 8 July, the smallest number since the interim US-Iran deal in mid-June (Anadolu Agency, 9 July 2026 ). Average daily transits after the mid-June deal had been 34 vessels, peaking at 59 on 24 June. Visible movements are now concentrated on the Iranian-approved northern route, with the US-backed Omani corridor quiet. This is a sharp reversal from the brief recovery we saw a fortnight ago and confirms last week's escalation was not a one-off.
Oil hit a one-month high above US$78-80 this week. Al Jazeera and Reuters on 13-14 July reported Brent crude climbing to a one-month high as US-Iran attacks in the strait stepped up (Al Jazeera, 14 July 2026 , Reuters, 14 July 2026 ). Reuters also reported the Brent Oil futures structure changed on 14 July to reflect mounting supply risk. CNBC on 14 July flagged a Trump-floated Hormuz toll proposal that could add another premium layer if implemented (CNBC, 14 July 2026 ).
The Australia-side impact this week: partial excise restoration is now live and biting. The ACCC 10 July weekly fuel report confirmed the 1 July step-down from 32 cpl relief to 16 cpl relief has flowed through, adding up to 17.6 cpl (including GST) to petrol and diesel at the bowser (ACCC, 10 July 2026 , IndexBox summary of ACCC 10 July report ). Full excise expiry is still scheduled for 2 August 2026 unless extended. IBTimes Australia on 12 July reported retail petrol prices are up in most capitals since 1 July with further volatility expected before the 2 August cliff (IBTimes Australia, 12 July 2026 ).
Looking ahead to Q4. The US Energy Information Administration Short-Term Energy Outlook released 9 July expects Brent to fall from an average US$103 per barrel in Q2 2026 to US$70 per barrel in Q4 2026, US$19 per barrel lower than the June forecast (EIA STEO, 9 July 2026 ). This suggests the market's medium-term view is that Hormuz supply issues will resolve by Q4. That is the market betting on eventual de-escalation, not certainty.
What we are doing at Rentoule Projects. First, still HOLDING the imported finish line contingency at 1 to 2 per cent (unchanged from last week). Second, calibrating any July-September quote with completion past October 2026 for the 2 August full-excise-expiry cliff on top of any escalation-driven fuel step-ups. Third, watching CMA CGM and other major carriers for any signal they may return to Gulf routing (they are still avoiding as at this week). Fourth, no changes to existing fixed-price contracts. Fifth, for clients considering signing a new contract this month, my honest read is the pricing window is firmer than a fortnight ago but still workable. If the escalation persists into August the cost picture worsens; if it de-escalates the 2 August excise cliff still lands. Both paths point to signing now rather than delaying.
Update - 22 July 2026
Brent crude has surged to US$92-95 per barrel this week, its highest level since 11 June and a 25 per cent jump from last week's US$76. This is the biggest weekly move since the conflict began in February. Fortune reported on 22 July that Brent hit US$95 per barrel on fresh war escalation fears (Fortune, 22 July 2026 ). The New York Times on 22 July: Brent climbed more than 4 per cent to approximately US$95 as war threats intensified (New York Times, 22 July 2026 ). Reuters on 22 July: oil climbed more than 2 per cent to a multi-week high after US announced a new round of strikes on Iran (Reuters, 22 July 2026 ). Every forecast we cited last week is now stale.
Hormuz shipping traffic has hit worst-case levels. Fortune on 21 July: transits fell to just 8 vessels on 16 July, down from 15 the previous day, and total transits for the week 14-20 July were down 66.2 per cent compared with the prior 7 days (Fortune, 21 July 2026 ). Before the conflict began in February, an average of 138 ships passed through the strait each day. The US-Iran interim peace agreement is described as "in tatters". BIMCO (one of the world's largest shipping associations) confirmed the traffic separation scheme, the traditional shipping lane through the middle of the strait, remains too hazardous for vessels because of the ongoing mine threat. Iran continues to target US radar and air defence installations in the Gulf.
A second front has opened. On 20 July, the Houthis (an Iran-backed Yemeni group) announced a maritime blockade on Saudi Arabia in response to what the group says is the kingdom's siege on Yemen's capital, Sana'a (Fortune, 21 July 2026 ). This adds a further constraint on the wider Red Sea and Gulf shipping picture that had partially recovered in June.
Australia-side impact is now visible at the pump. The Sydney Morning Herald on 20 July reported Brent had climbed back over US$90 per barrel after starting the month at US$71.80, warning "petrol pain about to grow" (SMH, 20 July 2026 ). The West Australian on 21 July: Labor backbenchers pressuring the Prime Minister to extend the fuel tax relief which currently expires 2 August (The West Australian, 21 July 2026 ). National unleaded is running around $1.76 per litre, diesel around $2.30 per litre, with ABC News reporting on 20 July that further increases are expected. The ACCC's 17 July weekly fuel report confirmed weekly average dated Brent moved above pre-conflict levels (IndexBox summary of ACCC 17 July report ).
The 2 August fuel excise cliff is now the critical trigger for Rentoule Projects quoting. If the current 16 cpl relief expires as scheduled with Brent still around US$90, retail diesel could climb another 15-20 cpl on top of the direct crude pass-through already flowing through this week. Extension of the fuel tax relief is now under active political consideration but not yet announced (as at time of writing).
What we are doing at Rentoule Projects. First, INCREASING the imported finish line contingency from 1 to 2 per cent to 2 to 3 per cent effective this week. The 25 per cent Brent move is beyond the range that a 1-2 per cent contingency was calibrated for. Second, calling suppliers this week to pull forward any orders that can be brought in over the next four weeks before the potential 2 August excise cliff and the sustained crude pressure fully flow through to landed cost. Third, reviewing all July-August fixed-price contracts for material exposure so I know where we sit if the situation persists. Fourth, no changes to existing fixed-price contracts already signed. Fifth, for clients considering signing a new contract now, my honest read is the window is closing week by week. The next four to six weeks look meaningfully tougher than the last four to six weeks. If the escalation persists into August and the excise expires as scheduled, quotes issued in September will be higher. If de-escalation happens (which the market keeps expecting but the events keep contradicting), the excise cliff still lands on 2 August. Both paths still point to signing now rather than delaying.
Update - 29 July 2026
The 2 August fuel excise cliff is now confirmed. Treasurer Chalmers announced on 29 July that the 16 cents per litre discount will end at midnight Sunday 2 August, with the full 52.6 cents per litre excise rate returning from 3 August. That is a 16 cent per litre step-up at the bowser, roughly $11 extra on a 65-litre fill (ABC, 29 July 2026 ). The Heavy Vehicle Road User Charge discount ends on the same date, so trades and freight cost pass-through follows immediately. NRMA warns the actual retail increase is likely closer to 17 cents once markups settle (SBS News, 29 July 2026 ). Chalmers said on 29 July that the Australian economy is "hostage" to the Iran war. Albanese has hinted further fuel announcements will come in the days and weeks ahead but nothing is committed.
Brent hit US$100 per barrel on 23 July, its first triple-digit reading since May. The market has since drifted back to the US$85-89 range this week on a mix of profit-taking, an OPEC+ meeting on 2 August that will consider an 188,000 barrel per day output increase, and rumours of a US-Iran ceasefire attempt (that Chalmers pointedly did not endorse). Even at US$85-89 Brent is well above the pre-conflict range of US$65-72 and the 30 June UBS forecast of US$70 for Q4 is now buried under a stack of stale forecasts.
Hormuz shipping is at genuinely disrupted levels, not scared-off levels. Lloyd's List Intelligence on 29 July reported vessel traffic fell to 39 transits for the week 20-26 July, down from 82 the prior week (a 52 per cent WoW drop). War-risk premium quotes have moved to 7.5 to 10 per cent of hull value (from a typical baseline near zero for peacetime), and inbound Gulf traffic remains down more than 90 per cent versus pre-strike levels (Lloyd's List Intelligence, 29 July 2026 ). Kuwaiti tanker strikes and Houthi Bab el-Mandeb attacks continued into this week. US strikes on Iran have now run for twelve consecutive nights.
Retail fuel context. Capital city average unleaded was 158.1 cents per litre following the 1 July partial restoration, with some cities recording as high as 189.9 cents per litre (Bushletter, 28 July 2026 ). NSW 95 RON premium currently 211 cents per litre, diesel 235 cents per litre (CarsGuide, 29 July 2026 ). The West Australian tracked Sydney unleaded at 186.8 cpl average. All of these numbers step up meaningfully from Monday 3 August.
Australia construction backdrop. ABS quarterly CPI (June 2026) released this week: new dwelling prices up 5.8 per cent year on year, Housing group inflation 6.8 per cent, driven by builders passing through higher labour and materials costs (ABS CPI, June 2026 quarter ). Automotive fuel showed year-on-year deflation of 7.3 per cent (with a June month-on-month fall of 10.9 per cent) reflecting the discount, but that arithmetic reverses from 3 August as the excise returns to full and cost pressure re-enters the CPI print. The next quarterly CPI (September 2026 quarter) is the one to watch.
What we are doing at Rentoule Projects. First, HOLDING the imported finish contingency at 2 to 3 per cent (unchanged from last week). The window between last week's spike and this week's temporary drift lower has not changed the underlying picture: Hormuz is disrupted, excise is coming off, and the Q4 forecasts are guesswork. Second, ordering all imported finishes for August-September delivery this week rather than waiting. The 3 August excise cliff will lift freight costs on inland movement regardless of what Brent does. Third, updating our project quoting sheet to factor a 16 cent per litre step-up on domestic diesel from 3 August, which flows into concrete deliveries, waste removal, and trades vehicle usage. Fourth, no changes to existing fixed-price contracts already signed. Fifth, for clients still considering signing a new contract, this Friday is materially better than the Monday after. The excise cliff is now confirmed. The Iran situation is not resolved. If you have been sitting on a quote hoping for de-escalation, the arithmetic case for signing is now clearer than at any point since April.
Update - 5 August 2026
The excise cliff landed and Brent collapsed the same week. The picture has changed again. The 16 cent per litre fuel excise discount ended midnight Sunday 2 August, and the full 53.7 cent per litre indexed excise rate returned from Monday 3 August, adding roughly 17 to 19 cents per litre at the bowser once GST layers on top (CarSorted, 2 August 2026 ). At the same time, Brent crude fell close to 15 per cent from last week's peak, currently trading around US$78 to $80 per barrel after Trump reportedly reached an outline of a deal with Iran and cancelled planned strikes (CNBC, 2 August 2026 , Fortune, 5 August 2026 ). One risk removed, one risk realised, and the base case now flips from Iran escalation to domestic supplier inflation.
Australian retail impact is now visible at the bowser. ABC News on 3 August: national average unleaded $1.97 per litre, diesel $2.39 per litre. The full retail flow-through takes about 10 days as service stations sell through fuel purchased at the old excise rate (ABC, 3 August 2026 ). RACQ economist forecasts unleaded peaking around $2.20 per litre and diesel around $2.60 per litre in coming days. The Guardian reported on 1 August that Canberra was already the most expensive capital pre-cliff, at 205.6 cents per litre for unleaded and 244.4 for diesel (The Guardian, 1 August 2026 ). The Heavy Vehicle Road User Charge discount also ended 3 August, so trades and freight cost pass-through is now flowing through.
Hormuz shipping recovered slightly but is still severely restricted. Lloyd's List Intelligence on 5 August reported 84 transits between 27 July and 2 August, up from 45 the prior week (Lloyd's List Intelligence, 5 August 2026 ). But daily traffic is still around 5 to 8 vessels compared with the 130 to 140 daily transits before the conflict began (Reuters, 5 August 2026 ). The Kuwaiti tanker strike on 1 August continues to weigh on carrier decisions to return to the Gulf. War-risk premiums stay elevated. So the Brent price relief may prove temporary if the outline deal does not translate into actual Hormuz recovery.
The bigger issue this week is not Iran. It is Australian supplier inflation. Tradelink notified builders on 1 August of new supplier price increases effective immediately: Australian Discount Plumbing 5 to 6 per cent, Fletcher Insulation 4.5 to 13.5 per cent, GWA 5 per cent, Linkware 8 to 13 per cent, Repelec 1 to 20 per cent, Electrolux 3.5 to 5 per cent (Tradelink price change notification ). These are direct, immediate flow-throughs to residential build cost, not the softer Iran-conflict fuel-and-freight impact. The ABS Producer Price Index (June 2026 quarter) released this week confirms the trend: house construction output prices up 2 per cent quarter-on-quarter and 5.9 per cent year-on-year, with new-house costs now 51 per cent above end-2019 (Broker News summary of ABS PPI June 2026 quarter ).
Construction costs now beat labour as the top constraint. The Good Builder on 4 August: construction costs are the main barrier for 77 per cent of surveyed property professionals, up from 65 per cent in Q1 2026, and now the number one blocker to new housing supply (The Good Builder, 4 August 2026 ). Labour availability has fallen to fourth. Master Builders Australia flagged 4 August that residential Housing Accord targets need 115,000 additional tradies (MBA interview, 4 August 2026 ).
What we are doing at Rentoule Projects. First, HOLDING the imported finish contingency at 2 to 3 per cent for now. The Brent drop is welcome but Hormuz traffic is still 90 per cent below normal, so releasing back to 1 to 2 per cent is premature until we see two consecutive weeks of daily transit recovery above 30 vessels. Second, reissuing quotes from this week with the Tradelink price increases factored in on plumbing, insulation, tapware and appliances. That is the harder, more concrete cost lift compared with the fuel excise story. Third, quoting sheet now reflects the full excise pass-through (16 cent step-up on diesel from 3 August, closer to 18 cents at retail). Fourth, no changes to existing fixed-price contracts already signed. Fifth, for clients still deliberating on a new contract, the mix has shifted but the direction has not. Supplier inflation is the new binding constraint. September and October quotes will reflect the compounding effect of Tradelink increases from 1 August, the excise cliff from 3 August, and ABS-confirmed construction cost inflation of 5.9 per cent year-on-year. The window has not opened up. It has just changed shape.
Update - 12 August 2026
Last week's Brent relief has reversed and Hormuz has gone backwards, not forwards. The bigger story this week is the state of Australian construction itself. Hormuz shipping traffic fell to a one-week low of 6 to 8 vessels a day this week, versus a 10-day average of about 11 and a pre-conflict baseline of roughly 73 per day per IMF PortWatch (or 130 to 140 including all traffic types). Six vessels crossed on Monday 11 August, eight on Tuesday (Reuters, 11 August 2026 ). The Iran-Oman shipping deal that briefly lifted spirits last week is not going to reopen the waterway on its own. Iran said on 8 August that reopening remains conditional on the United States accepting Iran's terms including compensation and lifting sanctions, and a UAE ADNOC-linked vessel was targeted by a missile in the strait the same day. On 11 August a suspected Houthi attack in the Bab el-Mandeb killed four crew.
Brent has rebounded from the outline-deal lows. Brent settled back at US$88.68 on 12 August (Straits Live, 12 August 2026 ), up from US$78 to $80 last week. The IEA's July report projected a 3.7 million barrel per day supply contraction for 2026. This week's IEA read is a further downgrade to about 4.3 million barrels per day (roughly 4 per cent of global supply) with a 1.27 million barrel per day deficit projected for the year (IEA Oil Market Report, July 2026 , with August update flagged this week). Refined fuel supply is significantly tighter than crude.
Australian retail is confirmed and Canberra is the most expensive capital. The ACCC's weekly fuel report on 7 August recorded Canberra unleaded at 215.3 cents per litre (up 11.0 cpl or 5.4 per cent from 2 August) and diesel at 255.4 cents per litre (up 11.5 cpl or 4.7 per cent). Across monitored regional locations, petrol was up around 7 per cent and diesel around 6 per cent week on week (ACCC Weekly Fuel Price Monitoring Report, 7 August 2026 ). If you missed the earlier update, the fuel excise discount ended midnight 2 August and the full 53.7 cpl indexed excise returned from Monday 3 August, so this is the full-flow-through picture.
Australian construction is now clearly under duress. ABS building activity data released 6 August: total dwelling commencements fell 11.2 per cent quarter-on-quarter in the March 2026 quarter to 48,012 dwellings, with private-sector houses down 3.5 per cent and other residential (townhouses, apartments) down 20.7 per cent (ABS Building Activity, March 2026 quarter ). Reuters on 12 August: house construction now takes 11.5 months versus 8.6 months a decade ago. Apartments take 33 months versus 21. Insolvencies are surging: 3,472 construction firms entered insolvency proceedings in the year to 30 June (Reuters, 12 August 2026 ). The Housing Accord 1.2 million homes target is now looking unreachable.
ACT-specific: the trade cliff. ABC News on 9 August reported only 7 apprentice bricklayers are currently training in the ACT, while the construction workforce has grown 10 per cent and apprenticeships have fallen 20 per cent (ABC News, 9 August 2026 ). If your project needs brick externals or a solid double-brick section, securing that trade window is now the tighter pinch point than material lead times. HIA on 12 August called out roughly 115,000 additional tradies needed to hit Housing Accord targets, and Master Builders separately flagged the same shortfall a week earlier.
Policy watch: NCC reform proposal. The federal opposition on 12 August proposed reducing the National Construction Code from more than 2,000 pages to 80, making most provisions optional (ABC News, 12 August 2026 ). HIA supports simplification but not unwinding current standards (HIA policy statement, 12 August 2026 ). Not enacted, so no compliance change for anything Rentoule Projects is quoting. Worth tracking. The trust tax reform proposal from Treasury also continues under consultation. Master Builders Australia estimates a family construction business with $400,000 taxable income could face up to a 70 per cent tax increase, plus $82,000 to $175,000 in one-off restructuring costs and $21,000 to $67,500 in annual costs (Master Builders Australia, August 2026 ). Also not enacted. Also worth tracking.
What we are doing at Rentoule Projects. First, HOLDING the imported finish contingency at 2 to 3 per cent for another week. Hormuz went the wrong direction so releasing is off the table. Second, adding an explicit trade-availability check-in to every new quote for any project that uses brickwork, tiling, plastering or plumbing beyond a normal fitout scope. If the trade window is tight, we agree it before contract signing rather than mid-build. Third, reviewing subcontractor and supplier financial standing more actively before committing to purchase orders. With 3,472 construction firms in insolvency proceedings in the year to 30 June, the counterparty risk on non-refundable deposits is real and rising. Fourth, no changes to existing fixed-price contracts. Fifth, for clients still weighing up a new contract, the case for signing has strengthened. Fuel is up, supplier inflation is confirmed, trade availability is tightening, and the industry is losing capacity through insolvencies. September and October quotes will reflect the compounding of all of that. The window has not opened up. If anything, it has narrowed further.
Update - 19 August 2026
Hormuz collapsed further this week and Brent is climbing back. On Sunday 16 August, zero commodity vessels crossed the Strait of Hormuz. That is not a slow week. That is a full stoppage day, and the first one since the 12-week partial recovery we saw through July. Reuters recorded 5 commodity vessels on Saturday 15 August, zero on Sunday, 6 on Monday 17 August, 6 on Tuesday 18 August (Reuters, 16 August 2026 , Reuters, 18 August 2026 ). Prior weekend was 31 vessels. UKMTO reported an outbound vessel struck by an unknown projectile on 18 August, engine-room damage, crew casualty, remaining crew rescued by the Omani Coast Guard (Reuters, 18 August 2026 ). No very large crude carriers or LNG tankers recorded Monday. A senior Iranian official on 17 August warned Iran had shifted from a defensive to a "fully offensive" posture and could attack if an interim deal with the United States is not implemented (Reuters, 17 August 2026 ). Peace talks stalled.
Brent is creeping back up. Brent moved from about US$88.58 on 17 August to US$91.14 on 18 August and US$91.62 on 19 August. WTI settled at US$85.83 (Reuters, 19 August 2026 ). That is close to a 3.5 per cent lift over three trading days on shipping-risk rather than a specific supply loss. Still well above the US$65 to $72 pre-conflict baseline, and if Iran follows through on its "fully offensive" language the direction is up, not down.
Australia's fuel security context. ABC News on 16 August: Australia currently holds around 3.3 billion litres of diesel reserves, roughly 36 days of consumption. Existing federal policy has allocated $3.2 billion to build diesel and jet-fuel reserves toward a 50-day International Energy Agency target (ABC News, 16 August 2026 ). This is context, not a policy shift. But it is the number worth remembering the next time a client asks how long Australia can absorb a shipping shock.
HIA warned this week on fixed-price contract risk. HIA on 17 August flagged rising fuel, freight and material costs as a specific fixed-price contract risk for builders in the current cycle (HIA, 17 August 2026 ). HIA also flagged domestic timber supply as critical to housing resilience on 18 August, effectively an early warning on engineered timber lead times for any project relying on it (HIA, 18 August 2026 ).
Two new demand-side risks worth flagging. First, HIA on 19 August estimated the proposed SMSF borrowing restriction could affect roughly 3,613 unstarted contracts, with an estimated 2,415 cancellations, reducing detached commencements by 3.5 to 5 per cent or 4,000 to 5,500 homes annually (HIA, 19 August 2026 ). Not enacted, but if you are working with clients who plan to fund a build through SMSF borrowing, the finance conditions need to be verified early rather than assumed. Second, HIA also reported an increase in building site theft, targeting copper cabling and other high-value items on active residential sites (HIA, 19 August 2026 ). Not directly tied to the Iran conflict but part of the same operational picture: pressure on the supply chain plus a lot of exposed high-value material sitting on sites.
ABS wages update. Construction sector wages up 0.8 per cent quarter-on-quarter and 3.3 per cent year-on-year in the June quarter Wage Price Index (ABS Wage Price Index, June 2026 quarter ). Ongoing labour cost inflation, not a shock. Adds to the compounding cost picture but does not by itself justify a step-change in quoting.
What we are doing at Rentoule Projects. First, HOLDING the imported finish contingency at 2 to 3 per cent this week, but the trigger for a step-up to 3 to 4 per cent is now clearly on the table. If Hormuz records another zero-vessel day within the next fortnight, or if Iran acts on the "fully offensive" language, we will bump. Second, new operational item: tightening site security on all active sites this week. Locking away copper cabling and high-value electrical, plumbing fixtures and tapware overnight rather than leaving them in the delivery envelope. Recording site inventory more actively. It is a small overhead relative to the replacement and delay cost of a hit. Third, timber orders: pulling forward any engineered timber orders for September-October delivery to lock in current pricing and lead times before the HIA warning turns into supplier pricing action. Fourth, for any client considering an SMSF-backed build, we are asking for the finance letter and SMSF trustee sign-off before we commit to a start date, rather than after. Fifth, no changes to existing fixed-price contracts. Sixth, for clients weighing a new contract, the story does not change. Fuel is up, shipping is worse, industry capacity is thinning, and demand-side finance risk is now visible. The window has narrowed further this week.
What is happening
On 28 February 2026, the United States and Israel launched military strikes against Iranian military and nuclear facilities. Iran responded by effectively shutting down the Strait of Hormuz, one of the most important shipping routes in the world.
Around 20% of the world's oil and 30% of its liquefied natural gas normally passes through this narrow stretch of water between Iran and Oman. When Iran clamped down, vessel traffic dropped from an average of 138 ships per day to just two within a week.
That single chokepoint has sent ripple effects through fuel markets, shipping routes and material supply chains globally. Australia is not immune.
How it is hitting Australia
Australia imports roughly 90% of its oil. We only have two refineries left in the country. That makes us particularly exposed when global energy supply gets disrupted.
Here is what the numbers look like as of April 2026:
Fuel
Diesel prices have climbed sharply. National average diesel reached around $3.14 per litre in late March, up roughly 36% in just two weeks following the escalation. The federal government responded with a temporary fuel excise cut (halved from 52.6 to 26.3 cents per litre) and dropped the Heavy Vehicle Road User Charge to zero until 30 June.
Diesel matters because construction runs on it. Civil construction gets around 79% of its energy from diesel. Every truck delivering sand, concrete, timber or steel to your site is burning diesel. When fuel goes up, everything that moves goes up with it.
Materials
Suppliers across Australia have introduced emergency fuel levies on products from sand and concrete through to bricks and roof flashings. Beyond fuel surcharges, some materials are seeing direct price pressure:
PVC and plastic piping: up 28-40%, driven by petrochemical feedstock shortages. Polypipe notified customers that PE resin spot prices for April were approximately 40% higher than March.
Asphalt: up around 50% in some regions
Stormwater and drainage products: up 30-40%
Cement: up 10-15% on imports, with trucking adding another 12-15% on top
Copper: up around 16.5% year on year, driven by both the conflict and structural demand from electrification projects
Shipping
Ships that used to go through the Strait of Hormuz and the Suez Canal are now rerouting around the Cape of Good Hope in Africa. That adds up to two weeks to transit times. Freight costs have jumped 30-50% on some routes, and container availability has dropped 15-20%. Anything imported from Europe or Asia is taking longer and costing more to get here.
What this means for building and renovating in Canberra
Master Builders Australia reported that new home building costs were already up 3.7% year on year to February 2026, the fastest increase in 16 months, and that was before the full impact of the conflict flowed through. Their chief economist Shane Garrett warned that material cost increases could push building costs even higher.
To put this in perspective, building a new home in Australia is now roughly 47% more expensive than it was just before the pandemic in late 2019. The concern within the industry is that a prolonged conflict could push that figure past 50%.
For a typical Canberra renovation or extension, the cost impacts are showing up in a few ways:
Fuel surcharges on deliveries : most suppliers have added 5-15% surcharges on anything that comes by truckPlumbing and drainage materials : PVC pipe and fittings are among the hardest hit because they are derived from petrochemicalsConcrete and cement : modest but steady increases, compounded by transport costsLonger lead times : some imported items are taking 2-4 weeks longer to arrive, which can push out project timelinesFixed-price contract pressure : builders operating under fixed-price contracts are absorbing cost increases that were not priced in. This is putting real pressure on margins across the industry.
What we are doing about it
At Rentoule Projects, we have been through supply chain disruptions before. COVID taught every builder in Australia hard lessons about pricing, procurement and communication. Here is how we are managing through this period:
We are locking in materials early. Where possible, we are ordering and securing key materials at the start of a project rather than waiting for each stage. This reduces exposure to price movements mid-build.
We are being upfront about costs. If you are getting a quote from us right now, it reflects current pricing. We are not padding quotes with fear-based contingencies, but we are being honest about where costs sit today and where they might move.
We are monitoring supply chains weekly. Our site manager and project coordinator track material availability and delivery timelines closely. If something is going to be delayed, we plan around it rather than letting it blow out your schedule.
We still offer fixed-price contracts. We believe in giving you certainty. But we also believe in being transparent about what goes into that price and why it sits where it does right now.
Should you wait to build or renovate?
This is the question everyone is asking. Here is my honest take.
Nobody can predict how long this conflict will last or when prices will stabilise. What we do know is that construction costs in Australia have only gone in one direction over the past five years, up. Waiting for prices to "come back down" has not worked for anyone who tried that strategy during or after COVID.
The Australian Treasury has modelled two scenarios. If oil stays around US$100 for the first half of 2026, it could add between 0.5-1.25% to headline inflation and subtract 0.2-0.6% from GDP growth. If oil hits US$120 and stays there for a prolonged period, the impact would be more significant.
What I would say is this: if your project is well planned, your budget has some breathing room, and you are working with a builder who communicates openly about costs, there is no reason to put your life on hold. Homes are long-term assets. The cost of building today will look different in five or ten years regardless of what happens in the Middle East.
If your budget is already tight with no room to move, it might be worth waiting a few months to see how the situation develops. But do not assume that waiting will automatically mean lower prices. It rarely does.
Frequently asked questions
How much have construction costs gone up because of the conflict?
It depends on the material. Fuel-related surcharges are adding 5-15% across most deliveries. PVC and plastic products are up 28-40%. Cement is up 10-15%. Overall construction input prices were rising at an annualised rate of 12.6% through February before the conflict even started, so the pressure was already building.
Will my fixed-price contract protect me from these increases?
If you have already signed a fixed-price contract, your builder is generally locked in to that price. The cost increases are being absorbed by builders and their subcontractors. If you are about to sign a new contract, expect current pricing to reflect today's market conditions.
Are there any materials in short supply?
PVC pipe and fittings are the most affected due to petrochemical disruptions. Some manufacturers have declared force majeure and warned of supply challenges. Imported finishes and specialty items may also face longer lead times due to shipping delays.
Has the government done anything to help?
Yes. The federal government halved the fuel excise from 52.6 to 26.3 cents per litre from 1 April to 30 June 2026 and dropped the Heavy Vehicle Road User Charge to zero. The ATO has also introduced flexible payment arrangements for businesses affected by high fuel costs. These measures are temporary and set to expire on 30 June unless extended.
How long will this last?
That is the question nobody can answer with certainty. Industry bodies are planning for scenarios ranging from a short-term resolution within a few months through to a prolonged conflict stretching into 2027. Most analysts expect construction costs to remain elevated through at least the second half of 2026, with a return to pre-conflict pricing unlikely in the near term.
Get in touch
If you are planning a project in Canberra and want to understand how current conditions affect your budget and timeline, we are happy to have that conversation. No obligation, no pressure. Just straight talk from a builder who has been through market disruptions before.
Call us on 0434 435 966 or email info@rentouleprojects.com.