Diesel prices across Australia could surge beyond $3 a litre as Trump eyes cut to US fuel exports

As fuel costs have risen to unprecedented levels since early April, Australian diesel prices are on track to surpass $3 per litre, potentially triggering inflation and prompting a rate hike. The situation has been exacerbated by the Trump administration's consideration of cutting US diesel exports amid ongoing negotiations with Iran.

Fuel prices in Australia have surged nearly 40 cents per litre in just one month, adding $22 to the cost of filling a 55-litre vehicle tank. Service stations have passed on increases from international refineries, which have experienced difficulties sourcing cheap oil due to ongoing Middle East conflicts. The Brent crude oil benchmark has hovered above $100 per barrel for two weeks and recently reached its highest level since May.

Gulf countries' diesel exports have plummeted to just one-quarter of pre-war levels due to conflicts disrupting transit through the Hormuz and Bab al-Mandab straits. Russian supply has also been cut off by Ukrainian attacks, further constraining global oil flow. Shortages would worsen if the US banned diesel exports, a measure being actively contemplated to curb local service station prices ahead of the November midterm elections.

Australia relies almost entirely on overseas imports for diesel, importing over 18.4 million litres between January and July 2026, with only 510.9 million litres sourced from the US. Analysts warn that a US export ban could force Australia to ration diesel and push prices above $4 per litre within weeks, though some experts remain optimistic about the country's supply.

The energy minister has stated that government-backed fuel purchases have slowed due to full storage facilities. The Albanese government temporarily reduced the fuel excise when prices exceeded $3.10 per litre in March but has not offered further cuts. High fuel costs pose significant threats to industries reliant on imported diesel, such as farming and mining, potentially driving up prices in food, manufacturing, and transport sectors.

The Reserve Bank is expected to raise interest rates to a 14-year-high of 4.6% on Tuesday, attributing the upward pressure to fuel costs.