The closure of the Strait of Hormuz during a war in Iran threatens to push Australia into recession as fuel supplies dwindle. AMP economist Shane Oliver warns that while price increases are immediate, the real economic impact will occur if fuel shortages force usage restrictions in the second half of the year. With Asia receiving 80% of its crude oil through the strait and Australian refineries dependent on Asian supply, inflation could reach 5-5.5% this quarter, potentially triggering interest rate rises before eventual cuts as the economy weakens.

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