Oil is the main pressure point: volatility tied to Houthi attacks on Saudi Arabia and the broader Iran conflict is lifting costs and denting sentiment, so any further energy spike would likely push confidence lower still. The survey highlights the RBA’s dilemma, with businesses souring under higher funding costs even as the central bank, according to minutes released today, worries about domestic capacity pressures and rising business inflation expectations. Weak confidence could argue for caution on further hikes, but the RBA has signalled it is prepared to tighten again if inflation stays sticky, leaving the Australian dollar and short-dated yields sensitive to upcoming inflation data. Mining’s relative resilience suggests resource-linked equities may continue to outperform domestically focused sectors.Newswire cut:Australian business confidence fell 4 points to -13 in September as Middle East oil volatility and rising funding costs weighed, NAB said, while conditions held at -1, both well below long-run averages after the RBA lifted rates to a 15-year high.One-line wrap:Australian firms are not falling apart yet, but with oil swinging, borrowing costs climbing and the RBA still hiking, their mood is heading in only one direction.Summary:NAB’s business confidence index fell 4 points to -13 in September, well below its level in February before the US-Israeli conflict with Iran beganThe business conditions index was unchanged at -1, but NAB said falling confidence suggests conditions are likely to deteriorate furtherConfidence fell in five of eight industries; mining, wholesale and retail saw some improvement, though in trend terms only mining remains positiveNAB cited elevated energy prices, higher funding costs and slower domestic growth, leaving both measures well below long-run averagesOil prices were extremely volatile in September after Houthi missile and drone strikes on Saudi ArabiaThe RBA raised its cash rate to a 15-year high of 4.60% last month, its fourth hike of the year, and has warned it may need to tighten furtherMain article:Australian business confidence weakened further in September as a surge in oil prices linked to escalating conflict in the Middle East raised concerns about costs, while business conditions held steady at subdued levels, a National Australia Bank survey showed on Tuesday, Reuters reported.NAB’s business confidence index fell 4 points to -13, well below its level in February, before the US-Israeli conflict with Iran began. The business conditions index, which tracks trading, profitability and employment, was unchanged at -1. NAB said the continued slide in confidence suggests conditions are likely to deteriorate further in the months ahead.The bank said energy prices remain elevated, funding costs have risen and domestic growth has slowed in 2026, adding that against this backdrop it was not surprising that both confidence and conditions were well below their long-run averages.The decline was broad based. Confidence fell in five of eight industries over the month. Mining, wholesale and retail recorded some improvement, but in trend terms confidence remains negative across every industry except mining.Oil markets were extremely volatile in September after Yemen’s Iran-backed Houthis launched missile and drone strikes against Saudi Arabia. The attacks, a spillover from the broader conflict between the US and Iran, pushed crude prices higher and fuelled concerns about persistent inflation, adding to cost pressures for Australian businesses.The survey comes as the Reserve Bank of Australia continues to tighten policy. The central bank raised its cash rate to a 15-year high of 4.60% last month, its fourth increase of the year, and warned it may need to lift rates further to bring inflation under control. Minutes of that meeting, released on Tuesday, showed the board judged that domestic capacity pressures were greater than previously assessed, and cited business surveys pointing to rising inflation expectations among firms.The latest NAB figures suggest that combination of higher energy costs and tighter monetary policy is weighing increasingly on business sentiment. With confidence often a leading indicator for conditions, the coming months will show whether the slowdown in sentiment translates into weaker hiring and investment, a development the RBA will be watching closely as it weighs further moves. This article was written by Eamonn Sheridan at investinglive.com.