Published April 25, 2026  |  Markets & Cost of Living  |  9 min read
By Theo Loxley

Petrol prices are rising again, and households are starting to feel the pressure not just at the pump, but across the wider basket of everyday expenses. Crude oil has surged past US$100 a barrel for the first time in more than two years, driven by sustained supply disruptions in the Middle East and a broader reassessment of global energy security.

According to data published by the U.S. Energy Information Administration, the front-month price of Brent crude rose from approximately $61 a barrel at the start of 2026 to a peak above $118 during the first quarter the largest inflation-adjusted quarterly increase in records dating back to 1988. As of late April, Brent was trading around $103 a barrel.

That increase is now flowing into freight, food and manufacturing costs across multiple economies, with analysts warning the pressure on consumer prices may persist into the second half of the year.

The path of Brent crude across Q1 2026. The first-quarter surge was the steepest, in real terms, in EIA records going back to 1988. Prices have eased from the peak but remain materially above pre-conflict levels.

The trigger has been geopolitical. A disruption in supply through the Strait of Hormuz, the narrow waterway that handles roughly a fifth of all globally traded oil, has effectively reduced the volume of crude reaching international markets. The disruption began in late February following military action in the region.

The International Energy Agency has indicated that approximately 13 million barrels per day of supply have been displaced or are at elevated risk, with no near-term resolution in view. Refining and export infrastructure across the Persian Gulf has been damaged or taken offline. Tanker insurance premiums have climbed, and shipping routes have been redirected around alternative corridors.

Analysts at the Resolution Foundation have characterised the episode as the most significant global energy disruption since the 2022 invasion of Ukraine. Natural gas prices have moved in step, given that much of the world's liquefied natural gas trade routes through the same chokepoints.

Markets have priced in a wide range of outcomes. Some forecasters expect a partial resolution and a return toward $80 by year-end. Others see the disruption persisting and crude trading in a wider $90 to $120 band into 2027. Both views accept that prices are unlikely to return to pre-conflict levels within the current calendar year.

The transmission mechanism is straightforward, even if its scale is often underestimated.

Crude oil is the upstream input for petrol, diesel and jet fuel, which together power the bulk of global transport. When the price of crude rises, the cost of moving goods rises in parallel.

Diesel in particular is the engine of supply chains. It powers the trucks that move freight from ports to warehouses, the trains that move bulk commodities, and the agricultural equipment that produces food. Fertiliser, manufactured largely from natural gas, becomes more expensive in the same cycle.

Plastics, packaging, asphalt, paints, lubricants, adhesives and many pharmaceutical inputs are derived from petrochemical feedstocks. Each of these flows into the cost of producing and distributing goods that consumers buy every week.

The result is a slow, broad-based lift in prices that does not appear all at once. It compounds across a series of weeks and months, showing up in different categories at different times fuel first, then freight-sensitive goods, then services that depend on transport, then finally household utility bills as wholesale energy contracts renew.

Fuel. Retail petrol and diesel prices have risen across most major markets in line with the move in crude. Data from the U.S. Energy Information Administration shows the average national gasoline price reached $3.99 per gallon at the end of the first quarter, with diesel at $5.40 per gallon both at multi-year real-terms highs. Distillate and jet fuel prices have risen even faster than gasoline, reflecting tighter Middle East product flows.

Food. Higher diesel costs flow into freight, refrigeration and farm operations within weeks, not months. Supermarket retailers in several markets have begun adjusting wholesale pricing on staples, and fertiliser cost increases are expected to feed into food production costs over the second and third quarters of the year.

Transport and travel. International airfares have climbed, with several carriers signalling that fuel surcharges may be reintroduced. Container freight rates, particularly on routes affected by the rerouting of shipping away from the Middle East, have firmed. Long-haul logistics has become measurably more expensive, with knock-on effects for any business that imports or exports goods.

Household bills. Energy retailers do not generally pass through global gas price changes immediately, but wholesale contract renewals have already tightened. Industry analysts are warning that the next round of regulated price reviews could result in larger-than-expected increases for both gas and electricity customers, particularly in markets with significant gas-fired generation exposure.

Inflation impact. Several major banks have revised their inflation forecasts upward in response to the energy shock. The OECD has cautioned central banks to remain alert to the risk of inflation expectations becoming entrenched, and has advised governments to keep cost-of-living support tightly targeted to avoid amplifying demand pressures.

Small businesses and independent makers are particularly exposed to rising input costs. Unlike larger manufacturers, they generally lack the purchasing power, hedging arrangements or long-term supply contracts that allow bigger firms to absorb or delay cost increases.

The pressure is arriving through several channels at once.

Materials are the most visible. Anyone working with timber, plywood, hardware, fasteners or finishes has likely already seen wholesale prices firm during the first quarter. Wood finishes varnishes, polyurethanes, stains and oils are heavily petrochemical-derived, and price-list updates from major suppliers have reflected that. Adhesives and structural glues, similarly oil-linked, are following the same trajectory.

Transport adds a second layer. Independent makers selling through online channels are seeing freight surcharges return on small-parcel networks. The cost of receiving raw materials, and the cost of shipping finished work to customers, are rising in parallel.

Packaging is a third, often-overlooked cost. Cardboard, foam inserts, plastic wrap, tape and labels are all directly or indirectly tied to oil and gas prices. Across a year, those small line items add up to a meaningful share of total cost for a maker selling at retail.

For small makers, understanding cost structures is becoming essential. A detailed examination of the economics of small woodworking businesses, including the realistic split between cost and profit, illustrates how thin operating margins typically are once materials, finishing, packaging and shipping are accounted for. In a high-input-cost environment, that arithmetic becomes considerably less forgiving.

— Common observation across small-business cost research

The squeeze is not just an inconvenience. It is structural.

Small operators tend to price their work on a cost-plus basis, with limited room to raise prices to match input cost increases without losing customers. That mismatch is what compresses margins during energy shocks and it is the same dynamic that historically separates side-hustle businesses that survive from those that quietly stop trading.

Rising costs are also exposing why most woodworking side hustles fail to scale sustainably, particularly when initial pricing was set on optimistic input assumptions. Pricing models built around 2024 or 2025 material costs no longer reflect 2026 reality, and the gap is widening.

Analysts suggest the small-business sector tends to feel energy-driven inflation later than larger employers, but tends to recover more slowly once it arrives. This is partly because cash buffers are smaller, partly because customer bases are more local and less able to absorb sustained price increases, and partly because alternative supply paths are limited.

For independent makers, the practical consequence is that the cost of doing business in mid-2026 is meaningfully higher than the cost of doing business in late 2025, even where headline product prices have not yet been adjusted. Operators who delay the repricing conversation will, in many cases, find that their effective hourly rate has fallen well below their stated one.

Some small operators are adapting by shifting to models that reduce reliance on materials altogether. Service-based offerings restoration, repair, custom installation, on-site work, consulting and teaching typically carry lower input cost exposure and can be priced more flexibly.

The same logic underpins the recent interest in zero-cost or near-zero-cost approaches to building a woodworking side income, including ways some operators are generating $500 a week without a dedicated workshop. These models substitute time, skill and customer relationships for capital and inventory, which becomes a more attractive trade-off in an environment where capital costs are rising.

Other adaptations being observed across the sector include the following.

None of these adjustments are universal solutions. But early signs indicate that operators who are reviewing their cost structures now, rather than waiting for the next quarter of bills, are managing the transition more comfortably than those who are not.

The forward outlook for oil remains uncertain. Most major forecasters, including the IEA and OECD, expect prices to remain elevated through at least the third quarter of 2026, with a wide range of outcomes thereafter depending on how the supply disruption resolves.

Commercial bank research published during the first quarter modelled three principal scenarios. The first assumes a measured de-escalation, with crude easing back into the $70 to $80 range by year-end. The second, which is closer to where prices are sitting now, assumes a prolonged disruption with crude trading in a $90 to $120 band through the rest of the year. The third, which most forecasters describe as a tail risk rather than a base case, assumes a broader regional escalation that pushes crude above $130 and keeps it there.

In all three scenarios, prices do not return to early-2026 levels within the year. The implication for households and small businesses is that the cost adjustment that began in the first quarter is not yet complete, and that the second and third quarters will continue to surface new price effects in goods and services that have not yet repriced.

Data indicates the lag between a move in crude and the corresponding move in retail prices for non-fuel categories is typically two to four months. On that timeline, much of the cost impact from the February-to-April price surge has not yet reached the consumer.

While energy markets remain volatile, the broader implication is clear: rising oil prices are likely to continue feeding into everyday costs, particularly for small operators and independent producers whose margins offer the least cushion against input cost increases.

For households, the practical takeaway is that the price effects observed in March and April are still working through the system, and that further adjustments at the supermarket, in energy bills, and in service prices should be expected through mid-year.

For small makers and side-hustle operators, the period ahead favours those who treat their cost structures as live financial documents rather than fixed assumptions. Reviewing margins, sourcing and pricing now, while the cost shock is still building, is likely to be more effective than waiting until the cumulative impact has compressed profitability past the point of comfortable adjustment.

Sources: U.S. Energy Information Administration (April 2026 quarterly review); International Energy Agency; Resolution Foundation Macroeconomic Policy Outlook Q2 2026; OECD Economic Outlook updates; Commonwealth Bank Economics (March 2026); commercial bank research and trade publications.