Expected to fall further after Iran eases shipping blockade
Fuel prices are expected to fall further next weekend after an Iranian leader announced the end of the regime’s weeks-long blockade of shipping from the Middle East.
While Australia also supports an international mission to keep the Strait of Hormuz open, Prime Minister Anthony Albanese said that any move by Iran against ships passing through the strait would disrupt the global economy.
Oil prices, which rose after the joint US-Israeli attack on Iran on February 28, fell 10 percent after Iranian Foreign Minister Abbas Araghchi announced on Saturday that the strait “will be fully open for the remaining duration of the ceasefire.” US President Donald Trump called this day a “great day for the world”.
Even before the promising news, Australia’s fuel prices were falling in line with global oil markets.
A high point was reached in late March, when the national average price of unleaded gasoline reached $2.58 per liter and diesel reached $3.27 per liter. Prices began to fall when the Albanian government halved the fuel tax to 26 cents on April 1.
Prices have fallen since then. The cheapest unleaded fuel in Sydney on Saturday was $1.84 a litre, while the citywide average was $2.01. The cheapest diesel in the city was $2.69, and the average was $2.96.
Melbourne’s cheapest unleaded petrol was $1.82 a litre, averaging $2.06. The cheapest diesel was $2.83 and the average was $2.97.
Australian fuel prices change in line with crude oil markets, typically with a lag of seven to 10 days. This means more discounts will soon be arriving at Australian petrol stations if the downward trend continues.
Every $10-per-barrel drop in oil prices could cause the pump at the pump in Australia to fall by 10 cents per liter.
The cuts in fuel prices began with the announcement of the US-Iran ceasefire on April 8. Crude oil is currently trading at $92 per barrel; It has fallen since early April at $128.
Despite the declines, experts warn it could take months or longer for prices to stabilize, normal shipping schedules to resume and damaged oil facilities to be repaired to full capacity. Before the war, oil was trading at $73 a barrel.
While Trump has heralded a peace deal, confusion remains over Iran’s stance ahead of the April 22 deadline for the ceasefire to end. The ongoing blockade of the strait is expected to raise oil prices once again and put upward pressure on domestic fuel costs.
Trump insists that the US blockade of Iranian ports will continue, and Iranian leaders say this will prompt them to close the strait. Iran also opposes US demands to give up its enriched uranium stockpiles.
But the National Highways and Motorists Association said cheaper fuel should be flowing into the domestic market for at least a week, barring a resumption of hostilities between the United States and Iran.
“Our expectation is that declines will continue as the ANZAC Day long weekend approaches. But things in the Middle East can change by the hour,” NRMA spokesman Peter Khoury said.
On Friday night, Albanese attended the Strait of Hormuz summit with 49 national leaders, including Britain, France, Canada, Germany and the United Arab Emirates. His main goal was to oppose the shipping fee, which would be used to provide significant revenue to Iran’s war-torn economy.
Albanese said such a move would pose an existential threat to global trade and promised Australia would make an economic and diplomatic contribution to international efforts to ensure freedom of navigation.
Requests for military contributions would be considered, he told a news conference in Sydney on Saturday.
“We want to see the Strait of Hormuz opened, we want to see no privatization and no tolls,” Albanese said.
The busy shipping channel carries more than a hundred cargoes of vital gas, fertilizer and chemicals a day, as well as a fifth of global oil supply, through a bottleneck adjacent to Iran’s coastline in the Persian Gulf.
“Freedom of navigation is very important for global trade. This is the way the world works, not only in fuel but in other areas as well,” Albanese said.
“The precedent that would be set if a country was allowed to close a strait to international traffic would change the way the global economy operates.”
Albanese said drivers did not need to reduce their consumption immediately, but fuel-saving measures may be needed if oil exports from the Middle East remain closed for weeks in the future.
“There may be difficult times ahead,” he said. “That’s why we want this war to end.”
Australia’s commitment to the Strait of Hormuz summit is another example of its shared priorities with other middle powers such as Canada and Japan, such as free trade and a rules-based global order, according to Jon Berry, head of geopolitics at KPMG.
“Australia feels its interests are best served by coming together with other middle power countries,” he said.
“The meeting overnight is an example of this, and we have seen other examples recently in Anthony Albanese’s aid to Singapore and Malaysia, as well as Brunei and Indonesia, to reaffirm and consolidate these trade and investment links.”
Energy Minister Chris Bowen announced on Saturday that the temporary removal of sulfur limits on unleaded petrol will be extended from the original deadline of late May to the end of September, so Australia can source fuel from a wider range of sources.
Bowen revealed a significant increase in Australia’s fuel stockpile. There is 46 days worth of unleaded gasoline in the tanks; That’s 10 more days than February 28, when the Iran war began. There are 31 days worth of diesel fuel in stock, the same as last week, and 30 days worth of jet fuel, up two days from last week.
Beginning the featuring a roundup of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
