Trump's possible cut to US diesel exports threatens surge in Australian fuel prices
Australian diesel prices could rise above $3 a litre if the Trump administration restricts US diesel exports amid tensions with Iran, adding to inflation pressure and making a further interest rate rise more likely.
Diesel prices in Australia reached their highest levels since early April on Thursday, and the situation could worsen further if the Trump administration follows through on a possible ban on US diesel exports.
Canberra recorded the nation's highest prices, with diesel at 298.7 cents a litre and unleaded at 250 cents. Other capital cities were not far behind. Prices have climbed almost 40 cents a litre since the start of the month, adding roughly $22 to the cost of filling a 55-litre tank.
Middle East tensions squeeze supply
The price rises stem from international refineries struggling to secure affordable oil as ongoing conflict in the Middle East disrupts fuel shipments to global markets. Brent crude has traded above US$100 a barrel for most of the past fortnight, its highest level since May. Exports of diesel from Gulf nations have dropped to roughly a quarter of pre-war volumes, as fighting blocks tanker traffic through the Strait of Hormuz and the smaller Bab al-Mandab chokepoint. Ukrainian strikes have further cut Russian supply reaching world markets.
Any US export ban — a measure the Trump administration is weighing to hold down domestic pump prices ahead of November's midterm elections — would deepen the shortage. According to ANZ Bank analysts, the US has significantly ramped up diesel exports since the war began and now ships over 1.5 million barrels a day globally.
Australia's import dependence
Australia relies almost entirely on imported diesel, bringing in more than 18.4 billion litres between January and July, of which only 510.9 million litres came from the US. Analyst Saul Kavonic warned that a US export ban could force Australia into diesel rationing, with prices potentially topping $4 a litre within weeks. Dr Lurion De Mello of Macquarie University struck a less alarming tone, though he still projected prices could exceed $3.10 a litre.
Australia's diesel stockpiles have fallen to a 31-day supply. High fuel costs threaten farming, mining and transport industries, and the Reserve Bank is expected to raise interest rates on Tuesday to 4.6%, a 14-year high.
