What caused the recent jump in Australian fuel prices, and how does it compare to earlier spikes this year?

The recent jump in Australian fuel prices was caused by the collapse of a ceasefire between the US and Iran, leading to resumed fighting and a sharp decline in oil shipments through the Strait of Hormuz — a critical waterway handling one-fifth of global oil and LNG supplies. According to the Australian Institute of Petroleum, petrol averaged A$1.82 per liter for the week ending July 26, with the weekly increase being the largest since the week ending March 29. Diesel prices also rose sharply, nearing A$2.20 per liter.

How has the Australian government responded to rising fuel prices, and why is that response being reversed?

Australia’s center-left government temporarily slashed fuel taxes to shield motorists, farmers, and miners from the Middle East energy shock. It began winding back this tax break after an interim agreement for US-Iran peace talks and the resumption of oil shipments through the Strait of Hormuz. However, with fighting resuming in Iran and Hormuz traffic falling to a trickle, the government’s reversal of the tax relief has contributed to renewed price pressure.

Australian Fuel Prices Jump Most Since March as Iran Truce Wilts

Jul 26, 2026

Australian fuel prices hit a seven-month high after a US-Iran truce collapsed, disrupting oil shipments through the Strait of Hormuz. The Reserve Bank of Australia warned that these rising costs pose significant risks to inflation expectations.

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