Australia Petrol Prices Fall Below Pre-Conflict Levels After Middle East Supply Disruption

Petrol prices in Australia have fallen below the levels recorded before the Middle East conflict began. Brent crude traded below US$80 a barrel on Friday, the lowest price since the conflict started. The US-Israel war on Iran closed the Strait of Hormuz, which carried about a third of the world's crude oil in 2025.

The International Energy Agency reported on Wednesday that global oil demand is on course to contract by about 1% this year.

Investment firm UBS estimates that the closure removed 20.5 million barrels a day of oil and products. Alternative pipelines added 4 million barrels a day, stockpile releases added nearly 4 million barrels, and China cut imports by about 4 million barrels a day, reducing the shortfall to 7 million barrels a day in May.

Asian nations imported record quantities of refined fuel from the Americas. India took large deliveries from Russia and Venezuela.

Australia has modest refining capacity and faced reduced exports from Brunei, Vietnam, Singapore, Japan, and China by April. Government data show Australia increased crude purchases from South Korea and jet fuel from Malaysia, along with diesel and petrol from the US.

The government authorised the release of 20% of reserve stocks and extended the measure until September. Reserves now stand at 44 days of petrol, 39 days of diesel, and 32 days of jet fuel. The government spent $7.5 billion to underwrite private companies' fuel purchases, supporting five companies with 16 diesel shipments and three jet fuel shipments.

Petrol prices reached about 260 cents a litre in March and have since fallen below 170 cents a litre. Diesel prices remain near 200 cents a litre. A 32-cent reduction in fuel tax contributed to the decline and is scheduled to expire on 30 June. Dr Lurion De Mello, senior lecturer at Macquarie University, said Australia secured more fuel than it was using.