Why fuel prices are going to spike
By Laura Berry May 29 2026 - 8:00pm
Are we about to go back to big petrol and diesel prices when the Australian Government's fuel excise expires? Here's an update to help you prepare.
On March 30 the Australian Government halved the fuel excise on petrol and diesel, resulting in a decrease of 26.3 cents per litre. The measure was taken to relieve the fuel price pressure caused by the war in Iran and the blockage of the Strait of Hormuz - the sea channel so much of Australia's oil travels through before refining.
At the time, 98 RON premium unleaded petrol was averaging 270 cents per litre, while diesel was hovering at 320 cents per litre in NSW.
Currently, 98 RON is averaging 210 cents per litre and diesel is an average of 225 cents per litre in NSW.
The government fuel excise relief was put in place for three months - April, May and June. On July 1 the excise is due to be put back in place.
If this were to happen today prices would not return to their previous highs, not immediately anyway. We'd be looking at possibly close to 240 cents per litre for 98 RON and 260 cents for diesel.
But there's two factors that could see prices skyrocket again.
First, the war is not over yet and freedom of navigation has not been restored in the Strait of Hormuz.
Second, even if the oil shipments return to pre-war regularity, we're four months behind in deliveries to Singapore and Malaysia. It's 7200km from Kuwait to Singapore and that takes a tanker 11 days if they crank it at 40km/h.
Despite the slow pace of the ships, what makes the system work is that there's a lot of tankers and they're always leaving the oil fields and always arriving at the refineries. Unless they don't leave in the first place, which they haven't, well not in the kind of numbers and with the kind of regularity required for the system to work.
The Australian government is acutely aware of this and to its credit has done the right thing and under new strategic reserve powers has secured fuel by going directly to the countries that refine it and implementing agreements, which have seen our supply levels topped up.
This includes 100 million litres in jet fuel from China secured in May and another 100 million litres of diesel before that in April.
"This agreement strengthens Australia's fuel security by ensuring additional cargoes are delivered to the domestic market when and where they are needed most," Prime Minister Anthony Albanese said.
"We're taking every practical measure required to shield our nation and household budgets from the worst of this global uncertainty."
Now 100 million litres of fuel sounds like a lot until you know Australia uses 90 million litres of diesel a day, according to the Australian Bureau of Statistics. As for petrol we use about 43 million litres a day, while 28 million litres of jet fuel is used daily.
I don't know about you but I find that's slightly terrifying, although I'm in admiration of the PM personally finding us fuel. Things are so bad that the Prime Minister himself is travelling cap in hand overseas to ask for a day's worth of fuel.
The good news is, if you can call it that, that as of May 25 the Australian government said we have 43 days of petrol left. That's five days more than there was on February 28 when the conflict in the Middle East started. There's 38 days of diesel left too, which is six more days than we had originally.
So will fuel prices skyrocket again and how do you prepare?
The prices will go up when the fuel excise relief ends. It's due to end July 1 and the government says it will review whether this will happen closer to the time.
As a parent my instincts tell me to expect the worst and hope for the best. We have two cars - a small petrol hatch and a big thirsty American classic car. We'll stick to the hatch and I'll just stare at the other one until I can afford to feed it.
In the meantime we are looking at buying a hybrid and considering whether an EV would work for us - it might have to. EVs are a lot more affordable to run both in servicing and refueling. Range anxiety is only a thing if you're covering big kilometres daily, especially with the newer models offering a real world 300-500km of driving range.
Brands such as BYD, Geely and MG have introduced EVs that even I can (almost) afford now. So it could be something like an Geely EX5 or MG S5.
I think longer term anyway, fuel crisis aside, EV is the way to go for a daily driver.
I can't tell you what to do, just what's happening now and what to expect and hopefully that will help you make your choices.
