Petrol could hit $2.80 a litre despite fuel excise cut

Petrol could hit .80 a litre despite fuel excise cut

March 31, 2026 — 15:13

Savings from a 26 cents per liter cut in fuel excise duty could be wiped out within weeks as the global oil price continues to rise, motorists’ diesel and gasoline bills will rise for the foreseeable future, and regardless of when the Iran war ends.

Oil reached record highs in Sydney and Melbourne on Tuesday, reaching an average of $2.58 per liter, while crude remained around $107 per barrel. The Albanian government announced on Monday that it will halve the 52 cents per liter tax on fuel for three months, starting April 1.

Fuel tax will be halved this week.Max Mason-Hubers

Describing the fuel excise tax cut as a timely and targeted effort to ease pressure on living costs, Finance Minister Jim Chalmers warned motorists will not see an immediate drop in gas prices.

“It’s really important to remember that the excise tax deduction applies or applies to wholesale fuel sales, so the whole 26 cents won’t show up at 12:01 tonight,” he said.

“It’s about replenishing stocks in warehouses, because this also applies to wholesale, currently the fuel in tanks is purchased at a higher rate.”

But AMP chief economist Shane Oliver said even if the war ended today and regular trade to the Middle East resumed immediately, the price of Brent crude, a global benchmark, was likely to reach $150 a barrel.

“The longer this goes on, oil prices globally will begin to reflect the full impact of the hit to supply, meaning you could hit $150 a barrel,” Oliver said.

The price increase will be driven by the cost of repairing damaged infrastructure and the weeks required to bring production back to capacity.

Oliver said if the oil price reached $150 per barrel in the coming weeks, as expected, unleaded petrol would sell for around $2.80 in Australia. However, if the conflict continues, prices could rise further, he said.

The rule of thumb for fuel prices is that for every $10 increase in the price of oil, oil prices increase by 10 cents.

“We appear to be retreating towards that level at the moment, and although we still have a long way to go, we could potentially [barrels will cost] $200,” Oliver said.

Analyst firm Wood Mackenzie said further weeks of halting exports could push Brent above $200 a barrel, and financial adviser RBC Capital Markets said Tuesday prices would rise unless shipments resume.

“With Brent rising as high as $115 per barrel, we believe there is still significant room for prices in an extended war scenario,” RBC said in a note to investors.

The ANZ-Roy Morgan measure of consumer sentiment, which fell to an all-time low last week, has fallen further.

The measure, first introduced in 1973, has dropped another 4.3 points in the past seven days.
Shoppers are not only more pessimistic about the economy and their own financial situation, they are also increasingly worried about inflation, which they expect to reach 7.3 percent.

The fuel excise cut will not reduce fuel prices but will help reduce the impact, Prime Minister Anthony Albanese said on Tuesday.

“There is no country that is immune from the impact of this and the longer the war continues, the worse the effects will be,” Albanese said.

“I accept that this does not offset the price increase, but it certainly makes a difference.”

However, the price cut will increase concerns about the Central Bank’s efforts to control inflation.

Minutes of the March 17 meeting, in which the bank split 5-4 to raise the cash rate to 4.1 percent, showed that supporters of the rate hike feared inflation would rise in an economy headed for war.

The bank predicted that oil priced at US$100 per barrel would mean inflation reaching around 5 percent by June; this was three percentage points higher than the previous RBA forecast.

But the minutes also show that bank members were concerned that the rise in inflation and supply chain problems caused by the war would ultimately lead to a slowdown in the economy.

“Members agreed that the decrease in oil supply and the resulting increased prices will probably reduce domestic and international economic activity,” the minutes said.

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