National petrol prices surge past $2.40 a litre with little relief in sight

The price of petrol in Australia has climbed above $2.40 a litre for the first time in more than six months, as an escalation of the Iran war deepens fears of a global oil shortage.

At service stations across the country, the national average for regular unleaded rose by an average of 3¢ a litre over the past week to nearly $2.41, according to new figures from the Australian Institute of Petroleum. While local diesel prices eased by 1¢ a litre to $2.83, they also remain at levels not seen since the early stages of the conflict.

The price pain for local motorists comes amid mounting threats to crude oil and refined fuel exports from the energy-rich Persian Gulf. A recent surge in attacks on oil tankers in and around the Strait of Hormuz, alongside renewed conflict between the Iran-backed Houthis and Saudi Arabia in the Red Sea, is stoking concerns in the industry about crucial shipping lanes.

“Iran and its proxies in the Middle East have stretched the war front to demonstrate control over the region’s oil production,” said Vivek Dhar, energy and mining commodities analyst at the Commonwealth Bank.

The risk of a broader regional fallout intensified over the weekend following deadly attacks on Riyadh’s main airport, sending global crude benchmark Brent oil surging as high as $US105 ($150) a barrel.

Worries about the volatile situation in the Middle East are threatening to override hopes that a deal between US President Donald Trump and Russian President Vladimir Putin to partially ease the US ban on Russian diesel could help relieve tightening supplies and lower prices ahead of the US midterm elections.

Combined diesel exports from the Middle East and Russia, which previously accounted for 45 per cent of seaborne diesel supply, have “reduced meaningfully” since the Iran war began at the end of February, analysts said.

“If these exports do eventuate, it will provide some relief to a market that is facing diesel shortages,” Dhar said. “But much will likely depend on Ukraine’s ongoing attacks on Russian oil infrastructure.”

The modest reprieve in Australian diesel prices in the past week follows a recent $US7-a-barrel decline in Singapore Gasoil, the regional benchmark in Asia, which influences local costs.

Peter Khoury, a spokesman for the NRMA, said it was likely that these falls were triggered by the announcement from the Group of 7 countries – the US, France, Italy, Germany, Britain, Canada and Japan – to release 100 million barrels of diesel and crude oil from their strategic stockpiles last week, which is equivalent to about one day of global demand.

“We believe the Gasoil drops are a result of that,” he said. “But we are waiting to see how the Asian markets react to what happened in Riyadh.”

Federal Energy Minister Chris Bowen on the weekend said Australia does “not want or need” to follow the US in sourcing diesel from Russia. Australia and other Western nations have imposed bans on imports of Russian oil and refined fuels to starve the Kremlin of revenue it needs to keep funding the war in Ukraine.

While acknowledging that “situation internationally remains difficult”, Bowen said Australia continues to have more than enough fuel, with 43 days’ worth of petrol and 31 days’ worth of diesel still stashed in reserves across the country, and dozens of tankers booked to bring in more fuel over the coming weeks.

The NRMA agreed that Australia’s supply levels remained healthy. “Supply continues to arrive,” Khoury said. “There’s nothing to suggest that’s going to change.”

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