Diesel prices across Australia are poised to surge above $3 per litre amid ongoing global supply disruptions and the potential for further export restrictions from the United States. The prospect of a US ban on diesel exports comes amid deteriorating negotiations with Iran and heightened geopolitical tensions in the Middle East, which continue to hamper fuel shipments.
As of Thursday, Canberra recorded the highest fuel prices among Australian capitals, with diesel at 298.7 cents per litre and unleaded petrol at 250 cents. Diesel prices nationwide have climbed nearly 40 cents since the start of September, translating into an additional $22 to fill a typical 55-litre vehicle tank. These increases follow sustained rises in international refinery prices, driven by constrained crude oil supplies.
Brent crude oil benchmark prices have remained above $100 per barrel for much of the past two weeks, marking the highest level since May. This pricing environment is fueled by reduced diesel exports from Gulf countries, which now stand at just one-quarter of pre-conflict levels due to blockades in critical maritime chokepoints such as the Strait of Hormuz and Bab al-Mandab. Further compounding supply pressures are Ukrainian attacks on Russian fuel infrastructure, which have curtailed Russian exports.
Analysts warn that a US diesel export ban, reportedly under active consideration by the Trump administration as a measure to curb domestic fuel costs prior to the November midterm elections, would exacerbate global shortages. ANZ bank analysts highlight the importance of American diesel exports, which have surged to over 1.5 million barrels daily since the onset of the Ukraine conflict.
Australia remains heavily dependent on imported diesel, having imported over 18.4 billion litres from January through July 2026, with only a small portion—approximately 511 million litres—sourced from the US, primarily in April. Saul Kavonic, an analyst at MST Financial, cautioned that a sudden US export ban could force Australia to ration diesel and see prices skyrocket above $4 per litre within weeks.
Conversely, Dr. Lurion De Mello from Macquarie University’s Transforming Energy Markets Research Centre assessed that Australia’s diesel supply situation remains stable, despite stockpiles having declined to about 31 days’ worth of consumption—levels comparable to March and down from 39 days in July. Energy Minister Chris Bowen noted that government-supported fuel stockpiling has slowed due to storage capacity limitations.
De Mello explained that a US export ban would intensify global competition for diesel, especially with Europe turning to Asian refiners such as those in South Korea. This increased demand would place upward pressure on prices but he projected that Australian diesel prices would likely stay below $3.50 per litre, assuming ongoing access to Asian supplies.
The Albanese government temporarily reduced the fuel excise in March when diesel prices exceeded $3.10 per litre but has not introduced further relief since. Rising fuel costs pose risks to sectors reliant on diesel imports, including agriculture and mining, potentially driving broader inflation in food, manufacturing, and transportation.
Fuel price inflation is contributing to wider economic pressures, with the Reserve Bank of Australia expected to increase interest rates to 4.6% this week, marking the highest borrowing cost in 14 years.