'Fill up now': Middle East conflict fuels uncertainty

Australians are being urged to fill up now, as global tensions threaten to drive fuel prices higher in the coming days.

The warning follows US-led airstrikes on Iranian nuclear facility targets on June 22. In response, Iran threatened to shut down the Strait of Hormuz, a maritime trade channel where one-fifth of the world's oil flows through every day.

The news has escalated fears about disruption to the global fuel supply.

As crude benchmarks respond to the instability, Australian fuel prices, which have recently sat near the bottom of the fuel cycle, are tipped to rise.

NRMA spokesperson Peter Khoury says the wholesale price in Australia has already jumped eight cents a litre since this flare-up began.

"It will go up again, this is the expectation," Khoury says. "We don't know by how much it will go up next - but based on what we're seeing out of the US, it could be three or four dollars a barrel."

"If you live in Sydney, Brisbane, Melbourne, Adelaide or Perth, fill up now."

In the lead up to the US attacks, Tapis crude - Australia's reference benchmark - surged by more than AU$11 per barrel. This translated to a 7.3-cent price increase per litre for Tapis in Australia.

Singapore's Mogas 95, which influences local unleaded petrol prices, also rose the equivalent of six cents a litre.

That kind of movement spells higher prices at the bowser with prices already expected to rise from yesterday, June 27, as retailers pass through wholesale increases.

And while both metrics have fallen in the days since following a fragile ceasefire, Khoury says it's still time to "fill up immediately" if you're in a capital city.

Fuel prices near a turning point

For much of May, motorists enjoyed some relief at the bowser.

National fuel prices dropped 2.9% in the month, according to the Australian Bureau of Statistics.

The average cost of unleaded in capital cities sitting at $1.73 per litre, about 20 cents lower than a year earlier and well below the $2.07 peak reached in September 2023.

But the latest data suggests the tide is turning. In Sydney, prices dropped 9.1 cents last week, but they rose by as much as 12 cents on the Central Coast.

The shift, says the NRMA, is a classic sign that the market has bottomed out and is about to swing back up.

Car fuel in Australia (monthly and annual movements)

Source: ABS

The government is watching the situation closely.

"The global economy is a dangerous place right now," Treasurer Jim Chalmers said, pointing to not just the Middle East, but also the war in Ukraine and rising trade tensions.

Oil prices have been anything but stable this year, sliding from US$82 a barrel in January to $62 in early June, before rebounding to $79, then settling around $65-$69.

Chalmers wrote a letter to the ACCC to "make sure that Australians are treated fairly at the bowser."

"We don't want to see service stations do the wrong thing by Australian motorists," he said.

"We want to make sure that the market is operating effectively when it comes to the petrol price and what's happening with this volatility in the global oil price, but we call on the service stations to do the right thing by their customers."

The Strait of Hormuz factor

Still, service stations may not have much choice but to raise prices if the Strait of Hormuz closure eventuates.

According to Goldman Sachs, a blockade of this critical but narrow channel could push oil prices above US$100 per barrel.

AMP chief economist Shane Oliver warns that if oil spikes to US$100 a barrel or more, petrol prices could rise by 25 cents per litre, and inflation would follow.

"If the oil price went to $100 to $150 a barrel and it's a much bigger boost to inflation, the Reserve Bank of Australia would be inclined to wait before cutting interest rates again," he told AAP.

"The price of airfares could go up, as well as plastic prices, which affects a lot of household goods."

The tech tools helping Australians save

With price volatility back in the headlines, motorists are turning to tech to stay ahead.

Fuel price apps are now used by 41% of drivers, up from 34% in 2022, according to the 2024 National Monitor of Fuel Consumer Attitudes report - and they're helping Australians shop around more than ever.

Only 20% of people consistently use the same service station anymore, as budget pressures prompt a more strategic approach.

Price remains king, especially for suburban and lower-income drivers. Supermarket vouchers have fallen out of favour, used by just 18% of consumers, while real-time price tracking apps gain traction.

According to an ACCC fuel app investigation, there are four government-run apps providing comprehensive and regularly updated retail fuel prices shown below.

In South Australia, all fuel retailers are required to report to a government database within 30 minutes of the price changing at the pump. There are a variety of apps that use this data.

Some commercial apps and websites, such as the My NRMA app, MotorMouth and PetrolSpy show fuel prices Australia-wide (including for retail sites in Victoria to the extent possible).

Fuel prices are also available in navigation apps such as Waze and Google Maps.

Of course, there are many other ways to reduce your fuel consumption beyond the bowser.

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