Key facts
- Australian diesel prices could surge above $3 a litre if the US cuts diesel exports.
- Canberra recorded diesel at 298.7c per litre and unleaded at 250c on Thursday.
- Prices have risen nearly 40c a litre since the start of the month.
- Brent crude oil has held above $100 per barrel for most of the last fortnight.
- Gulf countries' diesel exports have fallen to a quarter of pre-war levels.
- Australia imported over 18,400m litres of diesel from January to July 2026, with just 510.9m from the US.
Australian diesel prices are facing a potential surge beyond $3 a litre, driven by fears of US export cuts and ongoing geopolitical instability in the Middle East that is disrupting global oil supply.
Fuel costs have already climbed to their highest levels since early April, with Canberra recording diesel at 298.7 cents per litre and unleaded at 250 cents on Thursday. Prices have increased by nearly 40 cents per litre since the beginning of the month, significantly increasing the cost of filling up vehicles.
International refineries are struggling to secure affordable oil due to hostilities in the Middle East, which are impeding the transit of fuel tankers through critical chokepoints like the Strait of Hormuz and Bab al-Mandab. Ukrainian attacks have also impacted Russian supply, further constricting global oil flows.
The Brent crude oil benchmark has remained above $100 per barrel for most of the past two weeks, reaching its highest point since May. Gulf countries' diesel exports have reportedly fallen to just a quarter of their pre-war levels.
Concerns are mounting that the Trump administration may ban US diesel exports as a measure to suppress domestic prices ahead of the November midterm elections. ANZ Bank analysts noted that such a ban would be particularly disruptive, as the US has increased its global diesel supply to over 1.5 million barrels per day since the war began.
Australia relies heavily on imported diesel, with government data indicating imports of over 18,400 million litres from January to July 2026, though only 510.9 million litres came from the US, primarily in April. Saul Kavonic, an analyst at MST Financial, warned that a US export ban could lead to diesel rationing and prices exceeding $4 a litre within weeks.
However, Dr Lurion De Mello from Macquarie University suggested that Australia's supply remains healthy, with diesel stockpiles at 31 days' worth, down from 39 days in July. He noted that a US ban would increase competition for shipments from South Korea and other Asian refiners, potentially pushing Australian prices above $3.10 a litre, but unlikely to reach $3.50 as long as Asian refiners can access oil.
The Albanese government previously lowered the fuel excise in March when diesel prices surpassed $3.10 a litre, but has not announced a second cut. High fuel costs are expected to impact industries reliant on diesel, such as farming and mining, and contribute to inflation in food, manufacturing, and transport sectors. The Reserve Bank of Australia is anticipated to raise interest rates to 4.6% on Tuesday, partly due to the upward pressure from fuel costs.