Australians are being advised to temper expectations for immediate relief at the petrol pump despite the recent ceasefire agreement between the United States and Iran that ended months of conflict in the Middle East. Experts caution that several factors, including the expiry of domestic tax cuts and ongoing disruptions to global oil supply chains, will continue to keep fuel prices elevated in the near term.

Fuel excise and goods and services tax (GST) cuts, which have helped to mitigate rising petrol costs, are set to expire at the end of this month. The removal of these concessions is expected to add approximately 32 cents per litre to petrol prices starting July 1. This increase comes as the global oil market remains under pressure, with restocking efforts by foreign governments sustaining high crude prices.

Oil prices soared to nearly $120 per barrel in April amid the conflict, triggering a sharp rise in Australian unleaded petrol prices despite temporary reductions in taxes. Economists predict that petrol prices could climb close to $2.00 per litre once the excise and GST return to standard levels. Shane Oliver, an economist at AMP, noted that if the ceasefire remains stable, prices might ease to about $1.80 per litre, but any immediate significant drop is unlikely.

“Over the past four years, petrol prices have fluctuated between $1.65 and $2.10 a litre,” Oliver said. “With tax rates reverting, unleaded prices would initially approach $1.98 a litre before any potential fall influenced by improved oil flow.”

Diesel prices have already seen a gradual decrease from their peak above $3.14 per litre in April to around $2.10 per litre but are expected to decline slowly as supply normalises.

The four-month conflict inflicted extensive damage on oil infrastructure throughout the Persian Gulf, including refineries in Dubai, Saudi Arabia, Bahrain, Kuwait, and Iraq. Additionally, a significant U.S. strike targeted Kharg Island, a vital Iranian petrol distribution point, compounding supply challenges.

Critical to the global oil supply chain is the Strait of Hormuz, a narrow maritime passage that was blockaded by both Iran and the U.S. during the war. Iran had previously alleged the deployment of landmines and imposed tolls on vessels traversing the strait, raising concerns about the safety and timing of reopening this key shipping route. Recent tracking data shows hundreds of ships remain stranded in the area, some having been immobilised since the conflict began on February 28.

Jonathan Kearns, chief economist with financial firm Challenger, highlighted ongoing uncertainties surrounding shipping operations through the strait. “Shipping companies will be cautious before risking millions of dollars by travelling through the Strait of Hormuz,” he said, adding that it may take weeks for tanker traffic to return to normal volumes due to potential damage and logistical challenges.

Peter Khoury, a spokesperson for the NRMA, indicated that the practical implications of the peace agreement on petrol prices remain uncertain. He noted that clearer signals for Australian fuel costs will emerge after Asian markets, which strongly influence domestic pricing, complete a full day of trading following the ceasefire announcement. Khoury reassured consumers that there is currently no risk to fuel supply in the immediate future, encouraging families planning school holiday travel to proceed without concern.