Government Reassures on Fuel Supply as Oil Prices Rise
The federal government is moving to reassure motorists about Australia's fuel supply as oil prices climb amid renewed clashes in the Middle East. Energy minister Chris Bowen said Australians can be confident in the nation's fuel stocks.
"One thing Australians can be certain about is that our fuel supply continues to be solid and secure," Mr Bowen said. He noted that Australia currently holds 42 days' worth of petrol, 38 days' worth of diesel, and 32 days' worth of jet fuel — all more than on the day Iran was first bombed on February 28.
The reassurance comes as oil prices tipped over $US100 ($143) a barrel this week for the first time since May, with the national average unleaded 91 price at $1.88 per litre on Saturday and diesel at $2.30.
The conflict between the United States and Iran has escalated, with US President Donald Trump promising "major military punishment" for Tehran over attacks by Yemen's Houthi rebels on Saudi shipping in the Bab el-Mandeb Strait near the Red Sea. The expansion of the conflict, along with reduced output from the US, has prompted warnings from some analysts of "more sustained" price pressure in the months ahead.
Treasury Warns of Increasing Economic Risks
The economic risks for Australia from the continuation of the Middle East war are increasing, the Treasury has warned, as the federal government weighs whether to extend subsidies for petrol and diesel into August. In a briefing to Treasurer Jim Chalmers, the Treasury warned that the world had "weaker buffers" to absorb continuing disruptions to the oil supply.
During the initial phase of the conflict, the energy price shock was contained, the briefing noted, due to re-routing of exports, a drawdown in oil inventories, and some demand destruction. However, oil reserves around the world had already been depleted, and the spread of conflict has made the situation more vulnerable.
Oil prices have increased since the unravelling of a memorandum of understanding between the United States and Iran, with knock-on effects for Australian prices. Diesel, though below the peaks seen in late March, remains markedly above prewar prices across Australia. The price comparison for petrol is more mixed — now below the prewar benchmark in Melbourne, Sydney, and Brisbane, but above it elsewhere.
Mr Chalmers said the government was "monitoring day-to-day developments very closely", adding that Australians "have already paid too hefty a price for this conflict on the other side of the world". "From an economic point of view, a proper and permanent end to the war can't come soon enough," he said. "The longer this drags out, the more serious the consequences for inflation and growth here and around the world."
Fuel Excise Discount Due to Expire
The federal government's fuel excise discount is due to expire on August 2. After halving the fuel excise and the heavy vehicle road-user charge for three months, the government extended a smaller discount of about 16 cents per litre for July, which ends on Sunday. Prime Minister Anthony Albanese and Treasurer Jim Chalmers have indicated that the relief will not last forever and that there are no plans to extend it into August, but have not ruled out doing so.
Inflation Remains Stubbornly High
In related economic news, annual inflation came in at 3.8 per cent this week, cooling the prospect of an interest rate hike in August, but the figure remains higher than what the Reserve Bank of Australia and the federal government would like. The cost of most everyday items is up, with electricity seeing a significant jump largely due to the removal of various government subsidies that had helped people cover soaring power costs mostly caused by the war in Ukraine.
There has been a decrease in the price of automotive fuel, attributed to the federal government's fuel excise cut, but that discount is set to expire on August 2.
The data comes from the Australian Bureau of Statistics (ABS), specifically the June 2026 Consumer Price Index release. The monthly CPI series is relatively new and only available for all categories since April 2024, so figures displayed when "Since COVID" is selected use quarterly CPI data from the same release.