Even with a fragile ceasefire holding in the Middle East, the disruption to key supply routes has sent prices for essential commodities such as oil, gas and coal skyrocketing.
That's bad news for Australian families but good news for the budget bottom line, Â independent economist Chris Richardson says.
Mr Richardson predicts the taxman will rake in an extra $9 billion in the current financial year compared to the government's most recent estimate in December.
Over the next three years, higher commodity prices and an upgrade to income tax receipts due to high inflation will deliver an extra $27 billion in forecast revenue.
Mr Richardson said that would far outweigh increased spending on cost-of-living relief, including already announced cuts to the fuel excise, in the May budget.
"So far at least, the announced spending increases are well and truly swamped by the uncomfortable fact that war is a money-maker for the Australian federal budget," he said.
"Partly because war boosts inflation (which effectively acts as a tax), but mostly because the war has bid up the price of what Australia sells to the world."
Overall, the impact of the war on revenue and expenditure will make the bottom line about $30 billion better off over the four-year budget period.
Other factors increasing the tax take include the standard over-performance of commodities prices compared to Treasury's conservative estimates and a higher-than-expected migrant intake, up by about 50,000 people.
The temptation to shy away from productivity-boosting budget surgery was strong given voters were already hurting from high inflation and much-needed reform would create more losers, Mr Richardson said.
But he urged the government not to waste the crisis.
"The key political test for the budget comes down to how many people it is willing to annoy along the path to a better Australia," he said.
The government has promised big spending cuts in the budget, as well as tax reform to make the economy fairer for younger generations and to incentivise business investment.
Health Minister Mark Butler has not ruled out introducing means-testing to help rein in one of the biggest strains on the budget: the NDIS.
But the government's attempts to slow overall spending have been undermined by its efforts to ensure Australia doesn't run dry as a result of the Middle East fuel shock.
In a bid to shore up supplies, the Commonwealth will underwrite fuel cargoes, meaning wholesale buyers Ampol and Viva can bid at inflated rates and be reimbursed by the taxpayer if prices drop and they make a loss.
It's unclear how big the call on the budget would be if prices collapsed.
As the government worked to make Australia's supply chains and the economy more resilient, it was also working through big decisions in the budget, Dr Chalmers said.
"The budget will balance the pressures here and now with our obligations in intergenerational terms and that's how we're approaching this budget," Dr Chalmers told a politics in the pub event in Logan on Sunday.
The financial pain from the war in Iran would continue to hit the global economy and Australian households even with a lasting ceasefire, he noted.
"The stakes are pretty high and so we approach this oil shock and its aftershocks with a lot of hard work and humility," Dr Chalmers said, adding the budget would be about "fuel security, supply chain resilience and economic reform".
