Implementing the National Fuel Security Program and large-scale tax cuts, Australia actively responds to the sharp rise in fuel prices.

Currently, Australia has only two domestic refineries: the Lytton Refinery (QLD), owned by Ampol, and the Geelong Refinery (VIC), owned by Viva Energy. Their combined refining capacity stands at just 235,000 barrels per day. Compounding Australia’s severe fuel supply challenges, a major fire broke out at the Geelong Refinery at approximately 11 p.m. on April 15, 2026. As of the time this article was published—April 16—the fire was still burning. With a daily processing capacity of 120,000 barrels, the Geelong Refinery supplies over 50% of Victoria’s fuel and around 10% of Australia’s total fuel supply. However, Fire Rescue Victoria stated that the fire was caused by equipment failure. Deputy Commissioner Michelle Cowling told ABC Radio Melbourne that the ‘good news’ was that the blaze had been contained within a section of the facility known as the ‘transfer area,’ and that ‘this incident has not affected diesel, gasoline, or petroleum product production—so it will not further exacerbate the already-tight fuel supply situation.’ The ongoing U.S.-Israel-Iran war, which erupted on February 28, 2026, has driven continuous increases in global oil prices—directly triggering a sharp surge in Australian fuel prices. Within a week of the war’s outbreak, on March 5, 2026, fuel prices across many Australian regions hit new short-term highs: diesel prices soared to nearly A$4.00 per litre in some areas, while petrol prices reached A$3.95 per litre elsewhere. In major cities—including Sydney, Melbourne, and Brisbane—many service stations reported prices approaching A$2.20 per litre, prompting panic buying and long queues at numerous stations. As war-driven global oil prices continued climbing—surpassing the US$100-per-barrel threshold—the domestic petroleum supply situation deteriorated further. By late March 2026, some Australian service stations displayed ‘999.9’ on their price boards—indicating not a price, but rather that either diesel or petrol was completely unavailable. On April 6, 2026, Australian Energy Minister Chris Bowen announced that 144 service stations nationwide had run completely out of fuel, while another 283 had no diesel available—most located in New South Wales. As a net importer of petroleum, Australia’s strategic reserves fall significantly below the International Energy Agency’s recommended 90-day standard: as of April 11, 2026, Australia held only 38 days’ worth of petrol reserves, 31 days’ worth of diesel, and 28 days’ worth of aviation fuel. Beyond affecting ordinary citizens, the sharp fuel-price increase is severely impacting industries highly dependent on fuel—including transport, manufacturing, mining, and agriculture.

The Reserve Bank of Australia raises interest rates again, retaining room for further tightening in subsequent policy moves.

RBA’s Fourth Rate Hike This Year On Tuesday during the Asian session, the Reserve Bank of Australia’s (RBA) Monetary Policy Board unanimously decided to raise the cash rate target by 25 basis points to 4.60%—marking its fourth rate hike of the year and bringing the cumulative increase to 100 basis points. The policy rate has thus risen to its highest level since November 2011. While broadly in line with market expectations, this consecutive tightening underscores the RBA’s continued vigilance toward current inflationary conditions. Although prior monetary tightening has gradually dampened consumption, housing activity, and financing, the pace of disinflation remains insufficient—and certain inflation risks have even intensified—leading the Board to judge that further demand restraint remains necessary at this stage. Since markets had already largely priced in a 25-basis-point hike, the reaction following the announcement was relatively muted: the Australian dollar rose modestly against the U.S. dollar to around 0.7025, recovering somewhat from earlier lows. Compared with the magnitude of this hike, markets are paying closer attention to the RBA’s forward guidance on future policy. The unanimous support for this decision signals strong internal consensus on maintaining tighter financial conditions. Moreover, the accompanying statement offered no indication that the tightening cycle is nearing an end; instead, it reaffirmed that inflation risks and incoming economic data would remain central to future policy judgments. Consequently, the Australian dollar’s trajectory will continue to hinge on developments in inflation, employment, and broader economic activity. Rising Energy and Technology Costs Intensify Price Pressures Recent shifts in the inflation environment have become a key driver behind the RBA’s decision to maintain policy tightening. Escalating Middle East conflict has pushed global energy prices notably higher—current energy costs now exceed the assumptions used in the RBA’s August forecast. Simultaneously, surging investment in artificial intelligence has boosted demand for technology products and related equipment, lifting prices for certain tech goods globally. Amid rising external costs, domestic capacity constraints in Australia have also failed to ease meaningfully. Higher business input costs are increasingly being passed through to final prices: many firms have already raised prices for goods and services, and others plan further hikes. Meanwhile, short-term inflation expectations remain elevated, and recently released Australian price data have come in stronger than the RBA’s prior forecasts. The combined effect of energy and technology demand pressures, alongside persistent domestic capacity bottlenecks, is creating additional headwinds for disinflation—prompting the RBA to re-emphasize its focus on guarding against upside price risks. Economic Growth Moderates, Yet Demand Remains Resilient High interest rates are beginning to weigh on the Australian economy: consumer spending is gradually slowing, house prices continue falling across most capital cities, new housing loan volumes are markedly lower, and the labour market has cooled relative to earlier levels. At the same time, economic performance in the June quarter slightly exceeded expectations: business investment and debt growth remained robust, and leading indicators for the labour market stayed broadly stable—suggesting that although the economy is decelerating, it has not yet entered a pronounced slowdown.

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Australian inflation cooled in August despite a 14.8% rise in automotive fuel prices driven by high global oil costs, reducing expectations for immediate Reserve Bank interest rate hikes.

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Australia’s Inflation Slows Despite Surge in Fuel Prices

Australia’s Inflation Slows Despite Surge in Fuel Prices

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