Australians are grappling with sharply higher fuel costs in early April 2026 as the U.S.-Iran war disrupts global oil supplies, pushing wholesale prices higher and triggering a domestic fuel supply crunch despite government intervention.

A man poses with a gasoline pump at a Budapest petrol station January 19, 2011.

The conflict, which began in late February, has threatened shipping through the Strait of Hormuz and driven volatility in global oil markets. While Brent crude has fluctuated around $100-$110 per barrel in recent days — down from peaks above $110 but still well above pre-war levels — the impact on Australian petrol and diesel pumps has been immediate and painful.

Here are 10 essential things consumers, businesses and policymakers should know about the current oil and fuel price situation.

  1. Record-High Petrol and Diesel Prices Have Eased Slightly After Excise Cut National average regular unleaded petrol prices hit a record $2.38 per litre in late March before falling in early April. Following the federal government's decision to halve the fuel excise from about 52.6 cents to 26.3 cents per litre starting April 1, averages dropped 13-25 cents per litre in major cities. As of early April 4, unleaded sat around $2.23-$2.44 per litre in capitals, with diesel near or just under $3 per litre in many areas after similar relief. Some stations briefly dipped below $2 for unleaded before stabilising.
  2. The Iran War Is the Main Driver Disruptions to oil flows from the Middle East, including threats to the Strait of Hormuz, have caused a roughly 40% surge in Australian fuel prices since late February. Australia imports about 90% of its refined petrol and diesel, mostly from Asian refineries that rely on Middle Eastern crude. A potential "fuel supply cliff" at the end of April loomed as inventories ran low, though shipments are now en route and panic buying has eased somewhat.
  3. Government Halved Fuel Excise for Three Months Prime Minister Anthony Albanese announced the temporary cut on March 30, costing the budget around A$400 million in foregone revenue through June 30. Retailers passed on most of the savings quickly, with cities like Adelaide seeing the largest drops. A further small cut using GST revenue brought total relief closer to 32 cents per litre in some calculations. The measure aims to cushion households and businesses from the worst effects.
  4. Diesel Prices Hit Particularly Hard Diesel climbed above $3 per litre in several capitals in March, squeezing farmers, truckers, construction firms and councils. Surcharges of 8-10% have appeared on building projects and freight, feeding into higher costs for goods and services. Rural and regional areas faced even steeper increases and more frequent stockouts.
  5. Fuel Stocks Remain Tight but Improving As of April 4, Australia held about 39 days of petrol, 29 days of diesel and 30 days of jet fuel. The number of service stations without diesel has declined in states like New South Wales and Victoria, though dozens remain affected. Energy Minister Chris Bowen has assured supplies are strong, with billions of litres of fuel inbound, but warned against complacency.
  6. Global Oil Prices Have Moderated but Risks Remain Brent crude traded around $104-$110 per barrel in early April after peaking higher. Analysts warn that prolonged conflict could push prices toward $150 or even $180 per barrel if shipping disruptions worsen. Markets currently price in a relatively quick resolution, but a drawn-out war would extend pain at the pump and risk pushing Australia toward recession.
  7. Broader Economic Ripple Effects Are Emerging Higher fuel costs are inflating food prices, with grocers and farmers warning of increases in fresh produce, red meat and supermarket staples. Construction faces widespread surcharges, while public transport usage has risen modestly. Treasury modeling suggests a prolonged oil shock could shave 0.6% or more off GDP in 2027, though higher export revenues from coal, gas and gold provide some offset.
  8. No Immediate Return to Pre-War Prices Expected Even with the excise cut, fuel prices remain 20-40% above early 2026 levels. Economists forecast elevated costs for at least six months as global markets adjust. Households filling a typical 65-litre tank are still paying significantly more than before the conflict, adding to cost-of-living pressures.
  9. Strategic Vulnerabilities Exposed Australia's heavy reliance on imported refined fuel and limited domestic refining capacity has heightened concerns. Strategic reserves, while at multi-year highs, offer only weeks of cover under normal demand. The crisis has renewed calls for greater energy self-sufficiency and diversification of supply sources.
  10. What Drivers and Businesses Can Do Shop around using apps like FuelCheck or state price trackers, as regional variations persist. Fill up early in the week when prices often dip, combine trips, maintain proper tyre pressure and consider public transport where available. Businesses facing surcharges should review contracts and explore efficiency measures. The Australian Competition and Consumer Commission is monitoring for price gouging and excise pass-through.

The situation remains fluid. While the excise cut and incoming shipments have provided short-term relief, the underlying global supply shock tied to the Iran conflict means Australians should prepare for continued volatility through the middle of 2026 and possibly beyond.

Prime Minister Albanese and Treasurer Jim Chalmers have stressed that no government can fully insulate citizens from international events but have vowed to take further steps if needed, including potential extensions of relief measures.

For now, the combination of moderated global oil prices, government tax relief and stabilising domestic supplies has prevented the worst-case scenario of widespread shortages or prices exceeding $3 per litre for unleaded on a sustained basis. Still, the episode serves as a stark reminder of Australia's exposure to Middle East tensions despite its geographic distance.

Motorists heading into the Easter weekend on April 5 can expect relatively stable prices compared with late March peaks, but should check local stations as regional differences and daily fluctuations continue. Long-term, the crisis may accelerate policy discussions around fuel security, refining capacity and the transition to alternative energy sources.

As the war's outcome remains uncertain, so too does the trajectory of Australian fuel prices. Consumers are advised to stay informed through official sources such as the Australian Institute of Petroleum weekly reports and state fuel price trackers.