The US-Iran war has driven sharp price increases across a range of everyday Australian products, with petrol and diesel leading the charge as oil prices surged past US$100 per barrel and the Strait of Hormuz disruptions choked off roughly 20% of global supply. Treasury forecasts warn of headline inflation rising as much as 1.25 percentage points higher, while households face extra weekly costs at the pump and indirect hits to groceries, airfares and construction materials.

Petrol
engin akyurt / Unsplash

Australia imports about 90% of its refined fuels, leaving it exposed despite exporting crude oil and LNG. Petrol prices have climbed 20-70 cents per litre — or up to 40% in some areas — since late February, with national averages nearing A$2.20 per litre for unleaded and wholesale diesel hitting A$2.45. Here are 10 products experiencing the biggest price increases, ranked roughly by magnitude of reported or projected rises as of late March 2026.

1. Petrol (unleaded) — The most visible and immediate hit. Prices have risen fastest among developed nations in some metrics, with averages jumping from around A$1.60-1.80 pre-war to over A$2.00-A$2.20 in many capitals. A typical 60-litre tank fill-up now costs an extra A$12-24 or more, adding hundreds of dollars annually for average drivers. Panic buying has been reported in regional areas.

2. Diesel — Wholesale prices have surged even more dramatically, reaching A$2.45 per litre in spots, with retail increases of 30-40% or higher. Farmers, truckers and miners — heavy diesel users — face the brunt, with some operators imposing fuel levies or cutting routes. Diesel shortages could threaten autumn planting and freight movements if stockpiles (around 32 days) dwindle further.

3. Jet fuel and airfares — Jet kerosene prices have spiked dramatically, up 140% in some Asian spot markets since late February. Australian airlines including Qantas and Virgin have flagged or implemented fare increases of 10-20% or more, especially on long-haul routes. Domestic and regional flights are also seeing surcharges as carriers pass on higher costs.

4. Urea fertiliser — Prices have jumped more than 30% in the past month, with some reports showing rises of 50% year-on-year. The Middle East supplies up to 45% of global urea exports, and disruptions have tightened availability just ahead of peak autumn planting. Farmers warn of squeezed margins and potential flow-on to food prices, though many plan to maintain volumes.

5. Groceries and food items — Higher transport and fertiliser costs are feeding into supermarket prices. Bread, beer, dairy and fresh produce face upward pressure as diesel levies hit logistics and urea affects crop inputs. Economists and the National Farmers' Federation expect gradual but noticeable rises in the coming months, exacerbating cost-of-living strains.

6. Construction materials (concrete, sand, bricks, plumbing supplies) — Suppliers have introduced "emergency fuel levies" of 5-10% on everything from sand and concrete to hardware and fixtures. Builders describe COVID-like supply chain chaos, with residential construction costs rising sharply and some projects delayed.

7. Plastics and plastic-derived products — Oil is a key feedstock for plastics, so higher crude prices directly lift costs for packaging, household goods, agricultural films and consumer items. Indirect effects appear in everything from food wrapping to building materials.

8. Road freight and delivery surcharges — Logistics companies have added fuel levies across road, ocean and air freight. Everyday deliveries — from online shopping to supermarket restocking — carry higher costs that retailers are passing on to consumers.

9. Electricity and gas-related energy costs — While domestic gas prices have not spiked as dramatically yet, higher global LNG and coal prices (benefiting Australian exporters) and switching pressures could eventually feed into power bills. Energy-intensive industries face additional strain.

10. Consumer goods transported by air or sea (electronics, appliances, clothing) — Rerouted shipping, higher insurance premiums and fuel surcharges on imports from Asia have increased landed costs for a wide range of manufactured goods. Plumbing supplies distributors and other importers have already announced price hikes.

The pain is not uniform. Resource exporters such as LNG and coal producers are seeing windfall revenues that boost government tax receipts, potentially adding billions to the budget. However, households and small businesses bear the direct burden through higher transport and input costs.

Treasury scenarios show a one-month Hormuz disruption adding around 0.7-1 percentage point to CPI, while a three-month event could push it higher and shave GDP growth by 0.2-0.6%. The Reserve Bank is monitoring second-round effects, with some analysts warning of potential rate hikes if inflation expectations rise.

Government responses include releasing strategic fuel reserves, relaxing quality standards to boost local refining output by up to 100 million litres monthly, and coordinating with suppliers. Energy Minister Chris Bowen has emphasised short-term measures while longer-term fuel security reforms are debated.

Farmers and regional communities feel a double hit from diesel and urea. Trucking associations warn of potential widespread disruptions if AdBlue (tied to urea chemistry) shortages worsen, though that risk remains secondary to direct fuel costs for now.

Airlines and tourism operators face uncertainty, with higher fares potentially dampening domestic and international travel recovery. Construction, already under pressure, risks further slowdowns from material cost spikes.

Economists stress that while Australia benefits as a net energy exporter on the revenue side, the import dependence for refined products creates an asymmetric household impact. Calls for a windfall profits tax on fossil fuel exporters to fund relief or transition measures have grown.

As the conflict continues without swift resolution, price pressures could linger for months due to supply chain lags. Australians are advised to shop around for fuel, consider public transport where possible, and brace for gradual increases in supermarket and service costs.

The war serves as a stark reminder of Australia's energy vulnerabilities despite its resource wealth. Policymakers and industry leaders say the crisis may accelerate investments in domestic refining, strategic stockpiles and the green hydrogen transition — but for now, the pain at the pump and in shopping trolleys is the immediate reality.