Every major oil price surge of the past 25 years has been followed by a wave of business failures. With Brent crude rising sharply, small businesses are being warned to act now.
What’s happening: New analysis by Halo Advisory, drawing on ASIC insolvency records, RBA cash rate data and ABS statistics, has identified a consistent correlation between global oil price surges and Australian corporate insolvencies over the past 25 years.
Why this matters: Australia recorded 14,722 insolvencies in 2024-25, the highest figure in the 25-year dataset examined. That surge was primarily driven by the unwinding of pandemic-era support, not oil prices.
The relationship between oil prices and business failures in Australia is not new. It is consistent, measurable and spanning more than two decades of data.
New analysis by Halo Advisory, drawing on ASIC insolvency records, RBA cash rate data and ABS statistics, has identified that each of the three major oil price surges of the past 25 years was accompanied by a meaningful rise in Australian insolvency appointments in the same or immediately following year.
The 2000 spike to $28.50 per barrel, the 2006 to 2008 run to nearly $97 per barrel, and the sustained $108 to $111 per barrel period from 2011 to 2013 each preceded a wave of business collapses. The pattern has held across different economic conditions, different governments and different industries.
“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 currently seeing Brent Crude jump from a 2025 average of $71.91 to a forecasted $85.00 plus in 2026. This isn’t just about the cost of filling up the delivery van. It’s about the massive inflationary shock that ripples through the entire supply chain.”
With oil prices now projected to reach $90 to $100 USD per barrel in the coming months, driven by escalating conflict in the Middle East, Halo Advisory warns that Brent crude is set to become what it calls a Multiplier Effect on top of the pressures already bearing down on Australian small businesses.
The four channels hitting SMEs now
Bartels identifies oil as a non-discretionary cost driver that transmits almost immediately into business cash flows, unlike interest rates which operate with a lag of 12 to 24 months. The mechanism works through four simultaneous channels.
The first is transport and logistics. Freight and delivery companies pass on fuel surcharges almost immediately, raising input costs for every business in the supply chain regardless of whether they operate a single vehicle or none at all.
The second is raw material and input prices. Oil is a base component for plastics, packaging, chemicals and fertilisers. A sustained price spike flows through to virtually every manufactured good within weeks, hitting businesses that never thought of themselves as fuel-dependent.
The third is consumer spending contraction. As households absorb higher fuel costs at the pump, discretionary spending on retail, hospitality and services contracts, directly cutting revenue for the SMEs most heavily represented in insolvency data.
The fourth is interest rate pressure. Rising oil prices drive headline inflation, which can force central banks to maintain or increase interest rates to curb rising costs, further squeezing business margins at a time when many are already carrying significant debt.
“Small businesses are the canaries in the coal mine of the economy, and they’re beginning to show signs of real stress,” Bartels said. Construction and food services, which accounted for over 40% of all external administrations in 2023-24, face structurally higher fuel exposure relative to their margins, making them particularly vulnerable to the current environment.
The triple threat facing small businesses
Australia recorded 14,722 insolvencies in 2024-25, the highest figure in the 25-year dataset. But the Halo Advisory analysis is clear that this surge was primarily a COVID hangover rather than oil-driven. During 2020 to 2022, insolvency volumes were artificially suppressed by JobKeeper, ATO debt forbearance and safe harbour provisions. The current elevated rate represents a catch-up of deferred failures now meeting the reality of higher interest rates and intensified ATO enforcement.
The concern is what happens when oil is added to that equation. Australian SMEs are currently facing what Halo Advisory describes as a Triple Threat: the unwinding of pandemic-era support, persistently high interest rates, and now a geopolitical fuel spike arriving simultaneously. Each pressure would be manageable in isolation. Together, they are forming a compounding crisis.
The director liability dimension adds another layer of urgency. In 2024-25, 85,000 Director Penalty Notices were issued, a 136% increase on the previous year, making directors personally liable for business debts. For small business owners who have personally guaranteed loans or carry ATO debt, the stakes are not just commercial. They are personal.
Halo Advisory noted the Federal Government’s recent announcement to halve the fuel excise and reduce the heavy vehicle road user charge to zero for three months as a positive step. But the firm warned that while the measure provides immediate relief, fuel prices are likely to remain elevated well beyond that short-term window.
What needs to happen next
Halo Advisory has outlined a series of measures it is urging government to consider beyond the temporary excise cut.
The first is extended or trigger-based relief, moving toward measures that activate automatically during sustained price spikes to provide ongoing certainty for transport-dependent SMEs rather than requiring reactive policy decisions.
The second is ATO forbearance and interest reform, finding a middle ground between enforcement and collecting the $34 billion in outstanding SME tax debt. This includes potentially reintroducing tax deductibility for interest charges on ATO tax debts, a measure removed from 1 July 2025 that has added meaningful cost to businesses already carrying ATO obligations.
The third is addressing director liability, given the sharp increase in Director Penalty Notices placing personal financial pressure on small business owners at a time when trading conditions are already severe.
“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 2026 to be one of the most challenging periods for SME survival on record.”
For small business owners, the analysis is a prompt to act on financial pressure now rather than wait for conditions to deteriorate further. Engaging with advisers, reviewing ATO arrangements, understanding director liability exposure and building cash flow buffers while relief measures are in place are the steps most likely to matter in the months ahead.
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