Soaring global oil prices are emerging as a major insolvency trigger for Australia’s construction industry, amplifying pressures on contractors already battling thin margins, volatile input costs and tightening cash flow
A new report from Halo Advisory reveals a 25-year correlation between Brent Crude spikes and surges in Australian corporate insolvency appointments.
Data from the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia shows that every major oil price peak since 2000 has been followed by a predictable wave of business failures, usually within the same year.
While the record 14,722 insolvencies recorded in 2024–2025 were largely attributed to a ‘COVID hangover’, the end of tax forbearance and pandemic support, analysts warn that the 2026 outlook is far grimmer.
With oil projected to hover between US$90 and US$100 per barrel, fuel is now the primary driver of a ‘Triple Threat’ facing local businesses, alongside high interest rates and the unwinding of pandemic-era support.
“The data doesn’t lie. Every major peak in oil prices has preceded a surge in business collapses,” said Greg Bartels, Director of Halo Advisory.
“We are seeing Brent Crude jump from a 2025 average of $71.91 to a forecast of over $85.00 in 2026. This isn’t just about the cost of filling up a delivery van; it’s a massive inflationary shock rippling through the entire supply chain.”
Unlike interest rate hikes, which can take up to two years to fully impact a balance sheet, oil is a non-discretionary cost that hits cash flow immediately. The report identifies four critical pressure points:
- Margin Squeeze: Construction and food services, which already account for 40 per cent% of administrations, face structurally higher fuel exposure.
- Logistics: Freight surcharges are passed on instantly.
- Input Costs: Oil is a base component for plastics, chemicals, and fertilisers.
- Consumer Slump: As households pay more at the pump, discretionary spending in retail and hospitality dries up.
While the federal government recently moved to halve the fuel excise for three months, Halo Advisory argues temporary relief is not enough.
The firm is urging the government to consider “trigger-based” relief that activates automatically during price spikes and to reform ATO interest deductibility to help manage the AU$34 billion in outstanding SME tax debt.
“While the excise cut provides a temporary breather, the ‘cushion’ of cash flow will disappear again the moment it expires if global prices remain high,” Bartels said.
“We expect the remainder of to be one of the most challenging periods for SME survival on record.”