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Oil prices have already tumbled on the news that Iran will reopen one of the world's most important shipping lanes – and petrol and diesel at local stations may be next.
Lower petrol and diesel prices are inching closer, after the price of crude oil dropped following the news of a ceasefire between the US and Iran that is planned to reopen the Strait of Hormuz for two weeks.
However, experts warn that major drops in oil prices won't appear at Australian bowsers immediately, and it will take continued reductions for petrol and diesel prices to return to pre-conflict levels.
It comes as petrol prices in Australia dropped on average last week, but diesel became more expensive, despite cuts to the fuel excise.
Iranian Foreign Minister Abbas Araghchi said on X this morning that Iran will cease "defensive operations" and reopen the critical shipping lane if the US and Israel's attacks on the country are halted, as promised.
"For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran's Armed Forces and with due consideration of technical limitations," he said.
The price of a barrel of West Texas crude oil has dropped from USD$107.12 ($AUD156.56) to USD$96.70 (AUD$136.82) in the past six hours, as the two-week ceasefire was made public by Iran and US President Donald Trump.
It may take longer, however, for the price of petrol and diesel in service stations in Australia and overseas to drop.
"This is the news we've been waiting for for over a month. We were looking for an off-ramp. Hopefully this is it," NRMA spokesman Peter Khoury told Drive.
"If the ceasefire is sustained, then yes, we expect oil prices to fall, and that will start to flow on at the bowser. It will take a little bit, but flow on it will."
It has historically taken seven to 10 days for changes in global oil prices to be reflected at the pump, but Khoury said, given the speed at which prices rose earlier in the conflict, "we would imagine it needs to be much quicker."
"We'll be keeping a close eye on the terminal gate price. That'll come out this afternoon, it'll be the first response that we see – and based on that, we will hopefully start to see prices fall at the bowser."
Data from the Australian Institute of Petroleum shows the national average price of 91-octane regular unleaded petrol fell by 13.3 cents last week to 240.1 cents per litre.
It is not as significant as the 32 cents per litre reduction in the fuel excise tax introduced in recent days, particularly given the 'wholesale' average price of petrol dropped by 28.4 cents per litre last week.
The excise is charged to petrol and diesel providers on each litre of fuel they purchase – rather than by consumers – so it is the responsibility of retailers to pass on the reduction in the tax.
In contrast, the national average retail price of diesel rose by 2.7 cents last week, to 312.7 cents per litre, despite the excise cut.
Yesterday's data from the Federal Government shows 125 service stations were out of at least one type of fuel, with 34 completely dry.
The majority of the crude oil used in Australian petrol and diesel does not come from the Middle East – and only 20 per cent of the world's oil passes through the Strait – but its closure has caused havoc in the global energy market, and sent prices skyrocketing.
Alex Misoyannis has been writing about cars since 2017, when he started his own website, Redline. He contributed for Drive in 2018, before joining CarAdvice in 2019, becoming a regular contributing journalist within the news team in 2020. Cars have played a central role throughout Alex’s life, from flicking through car magazines at a young age, to growing up around performance vehicles in a car-loving family. Highly Commended - Young Writer of the Year 2024 (Under 30) Rising Star Journalist, 2024 Winner Scoop of The Year - 2024 Winner
