Fuel price pain might remain despite talk of Iran peace
Australian motorists are unlikely to benefit from any deal to end the Iran war due to the looming end of the fuel duty rebate.
US President Donald Trump is touting an imminent peace deal with Iran, even as conflict continues in the Middle East and officials in Tehran are acting more cautiously.
Mr Trump’s announcement that the agreement to end the war was “almost done” caused global oil prices to fall; But even if such a deal were reached, the impact on Australian petrol and diesel prices would be minimal, analysts said.
While fuel prices soared in the immediate aftermath of American and Israeli attacks on Iran, they are now lower than before the war in most states and territories, primarily due to the fuel tax being cut in half.
Prime Minister Anthony Albanese and Energy Minister Chris Bowen had been building expectations that the tax cut was likely to end from July, but sources said the measure was being reviewed almost weekly.
If an end to the war is announced in the next few weeks, oil prices will gradually fall, AMP chief economist Shane Oliver told AAP.
“If oil prices stay where they are now and the fuel tax cuts are reversed, then you would add at least 32 cents per liter to gas prices,” he said.
“But we will probably still be slightly above our pre-war levels because it will take some time for oil prices to return to normal levels and there will still be some risk premium priced in due to concerns that oil will flare up again.”
Mr. Trump has repeatedly said he has been close to ending the war since the fighting began in February but has yet to secure a lasting ceasefire.
Iran recently announced the complete closure of the Strait of Hormuz, which carries approximately one-fifth of the world’s oil resources in peacetime.
NRMA spokesman Peter Khoury was skeptical of the president’s comments, saying they meant nothing until peace was signed, sealed and delivered.
“Until the peace deal is signed and the strait reopens and we start to see tanker traffic flowing, it’s unlikely to mean much for the Australian driver,” Mr Khoury told AAP.
Finance Minister Jim Chalmers said on Thursday the government was unlikely to extend the excise cut due to its $3 billion cost, but the measure was under constant review.
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