Petrol hits 17-week high, but relief ahead

Fuel prices have lifted another three cents a litre to a 17-week high, but there's relief on the way for some motorists.

Falling petrol prices in Melbourne and Perth suggest these cities have entered the discounting phases of their fuel cycle, which means prices will fall before lifting again, usually sharply.

The national average retail petrol price hit $1.99 a litre last week, the Australian Institute of Petroleum report shows, with diesel staying flat at around $2.35 a litre.

Average fuel prices are sitting above $2 a litre in Sydney, Melbourne and Brisbane.

CommSec chief economist Craig James pointed to two major developments that were shaping oil markets - the weaker-than-expected US inflation read, and signs of a slight pullback in China's strict COVID-19 restrictions.

"Together the two developments may boost demand for commodities (raw materials) including energy commodities such as crude oil," Mr James said.

On Friday, the Brent crude oil price rose by 2.5 per cent to $US95.99 a barrel, recovering from losses earlier in the week

Mr James said the main oil producing companies would be watching these movements carefully as they considered oil production quotas.

"OPEC-plus could decide to pump more oil on the hope that it may gain from both stronger demand for oil and higher prices, attempting to hold oil prices near $US85-90 a barrel," he said.

Meanwhile, Treasurer Jim Chalmers said the minor relaxation of COVID restrictions in China was promising news for Australia.

"One of the reasons why the Chinese economy is slowing is because of these COVID restrictions, and that has big implications for Australia," he said.

He said eased restrictions could help repair Australia's trade relationship with China.

"We don't pretend to take domestic decisions about COVID management on behalf of other countries, but the Chinese slowdown is having big implications for us," Dr Chalmers said.

"We would like to see, as part of the stabilising of the relationship, some of those trade restrictions lifted."

Supply chain issues are easing but around a quarter of Australian businesses are still struggling to access supplies when they need them, a NAB survey shows.

The survey of 760 business owners revealed improving supply chain conditions, but high labour costs remained a concern.

NAB executive for business metro Michael Saadie said the tight jobs market was driving up labour costs and inflating prices along the supply chain.

Mr Saadie said investing in Australian-based manufacturing could improve the resilience of businesses reliant on overseas suppliers.

"Although global supply chains are improving, greater investment in local manufacturing facilities opens up a lot of opportunities - it means reducing reliance on overseas suppliers while also stimulating the local economy through valuable jobs," he said.

More than half of Australian business owners are eying off Australian-based suppliers to protect their companies from supply chain pressures.

Trade Minister Don Farrell said diversification was also central to supply chain resilience, suggesting the over-reliance on China as a dominant trading partner.

"We need to deepen and more importantly diversify our trading relationships, particularly in our own region," he said at an RMIT event in Melbourne.