Why your next tank of petrol could cost $24 more despite US-Iran deal

“This has been a really difficult period for the globe to deal with. We’ve responded appropriately and we’ll give proper consideration to it.”

The government’s 32¢ reduction comprised a fuel excise cut of about 26¢ per litre plus a rebate of around 5.7¢ per litre for the extra GST made from the price spike.

The price of unleaded petrol across the major capital cities is hovering at around $1.60 per litre – up around 10¢ a litre on the lowest pre-crisis prices, which were at 15-month lows.

NRMA spokesman Peter Khoury said the full return of the excise would put petrol prices about 40¢ higher than they were before the crisis began in February, while diesel prices would probably be around 60¢ higher.

“If the deal holds and the strait reopens, then we would expect those prices to continue falling,” he said.

“If price trends continue, it would soften the impact of a full return of the excise. It won’t wipe it out completely, but it will soften the impact.”

Benchmark oil prices fell 5 per cent overnight and have fallen by around 17 per cent over the last seven days.

As a general rule, it takes around seven to 10 days for benchmark prices to flow through to petrol pumps. A 40¢ a litre increase in petrol prices translates to an extra $24 for an average tank of fuel.

Khoury said not all petrol stations would pass on the excise immediately, and many would wait until they had exhausted cheaper supplies.

“We need long-term relief from high diesel prices but we’re only going to get it with a stabilisation of global oil flows. The primary cause of high diesel prices wasn’t tax,” he said.

The government will decide next week whether to extend all or part of the temporary fuel excise.

Speaking after the Reserve Bank left interest rates on hold on Tuesday, Treasurer Jim Chalmers said prices had fallen significantly from the height of the crisis in March, and the government kept the fuel excise relief policy “under more or less constant review”.

“It’s always been temporary, and we have always said throughout that we’ll review it from week to week,” he said.

“We’ve been making a meaningful difference to diesel prices as well as petrol prices.”

Tom Woodlock, a senior analyst at oil research firm Argus, said news of the US-Iran deal had begun to eat into the “fear premium” that had been attached to oil prices since the start of the conflict.

“Oil markets have been pricing in the major supply shock of the Strait of Hormuz being closed and this led to refining margins and prices since the US-Iran war began to increase,” Woodlock said.

“When news broke that the US and Iran were close to a deal and the Strait of Hormuz could reopen, that fear premium quickly disappeared.”

He said that while prices had fallen 5 per cent since the announcement, oil refining margins for diesel were down around 9 per cent and jet fuel more than 10 per cent.

“In short, the fuels most exposed to Middle East disruption – diesel and especially jet fuel – fell the most as the risk premium quickly unwound.”