Australian Petrol Prices Jump as Fuel Excise Cut Expires and Middle East Conflict Pushes Oil Prices Higher

Australian motorists are facing a significant jump in fuel costs this week, as a temporary reduction in the federal fuel excise expires and rising international oil prices tied to the ongoing conflict in the Middle East continue pushing pump prices higher across the country.

The Australian Competition and Consumer Commission's most recent weekly fuel price monitoring report, covering the week ending July 29, showed capital city petrol prices averaging 193.6 cents per liter and diesel averaging 232.8 cents per liter, according to figures compiled by IndexBox. Both figures reflect a notable increase from previous weeks, driven by a combination of the partial restoration of the federal fuel excise and higher international refined fuel prices tied to ongoing Middle East instability.

The current 16-cent-per-liter reduction in the federal fuel excise is set to expire Aug. 2. From Aug. 3, the excise rate rises to 53.7 cents per liter, reflecting both the return of the 16-cent reduction and a separate indexed adjustment of 1.1 cents per liter tied to changes in the Consumer Price Index. That increase follows an earlier partial restoration of 16 cents per liter that took effect July 1, after a larger, temporary 32-cent excise cut had been in place beginning April 1. Taken together, the combined impact of these tax changes, including flow-through effects on the goods and services tax, could add up to 17.6 cents per liter to pump prices, according to the ACCC's analysis.

Wholesale fuel costs have moved sharply in the same direction. Average terminal gate prices for petrol across Australia's five largest cities rose by as much as 36.8 cents per liter between June 30 and July 29, while terminal gate prices for diesel climbed by as much as 63.8 cents per liter over the same period. The Australian Taxation Office published the updated fuel excise rates on July 29, formally confirming the new 53.7-cent-per-liter rate that took effect this week.

Current national average pump prices reflect the scale of the recent increases. According to fuel-tracking service Petrolmate, the national average unleaded petrol price stood at 198.9 cents per liter as of Aug. 1, up 26.0 cents compared with the previous month. Victoria currently holds the position of Australia's cheapest state for petrol, with an average unleaded price of 197.1 cents per liter, while the Northern Territory has the country's highest prices, averaging 244.0 cents per liter. Petrolmate's tracking draws on data from more than 13,600 fuel stations nationwide, sourced from official government fuel-price monitoring programs across each state and territory.

The recent price increases follow a period of extraordinary volatility in Australian fuel markets over the past year. According to Trading Economics, gasoline prices in Australia climbed to a record high of $1.74 per liter, measured in U.S. dollar terms, in March 2026, up sharply from $1.22 per liter in February, reflecting a combination of global oil market pressures and domestic tax policy changes over that period.

Beyond the immediate pricing pressures, Australia has also moved to address longer-term questions about the country's domestic fuel refining capacity. On July 28, the Federal Government and the Government of Western Australia jointly announced plans and funding for a feasibility study into developing a new oil refinery in Western Australia, a project that, if it proceeds, would represent the first large-scale refinery built in Australia since the 1960s. Australia currently operates just two large-scale oil refineries, one in Brisbane and one in Geelong, a significantly reduced domestic refining base compared with earlier decades, when the country hosted a considerably larger number of operating refineries.

Viva Energy, which operates the Geelong refinery, released a trading update July 28 covering the six months to June 30, 2026, reporting that its refiner margin for the Geelong facility had increased in U.S. dollar terms during the period, reflecting broader strength in refining margins across the region amid the current period of elevated global oil prices.

Despite the recent increases, Australia continues to maintain comparatively low fuel prices relative to many other developed economies. Official statistics from the Bureau of Resource and Energy Economics and the International Energy Agency show that Australia has historically maintained among the lowest petrol and diesel prices of any OECD member country, a position attributed in part to the country's domestic oil and gas production, which reduces reliance on imported fuel and helps moderate retail prices compared with nations more dependent on international energy markets.

With the higher fuel excise rate now in effect and international oil prices remaining sensitive to further developments in the ongoing Middle East conflict, Australian motorists are likely to continue facing elevated fuel costs in the near term, even as the government's proposed new refinery feasibility study represents a longer-term effort to address the country's broader fuel security and refining capacity concerns.