Petrol still expected to climb well above $3 a litre despite easing oil price
Tuesday, 10 March 2026
Motorists can expect to pay about $3.20 to $3.30 a litre for petrol despite oil prices falling back sharply on Tuesday, according to industry sources.
It is understood the price of imported petrol and diesel remained about 80% higher this morning than it was just prior to the US and Israel striking Iran on February 28, even after the price of oil dropped back to about US$90 a barrel.
Petrol was selling for about $2.50 a litre prior to the conflict, with about 90 cents of that accounted for by the cost of fuel itself, and much of the rest down to taxes and levies.
An 80% rise in the fuel cost component implies a pump price of about $3.20 to $3.30 for 91 octane petrol, about 75c a litre more than the pre-conflict price. An industry source confirmed The Post’s broad calculations while noting the potential for continued volatility.
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Petrol companies generally price fuel based on the price importers would need to pay to replace the fuel they are currently selling, meaning the full effect could feed through to the pumps quickly.
Oil prices dipped back sharply amid discussions between G7 countries on releasing reserves and hopes for an early end to the Iran conflict.
US President Donald Trump appeared to suggest US operations against Iran could end soon, by saying the war was “very complete, pretty much”.
The price of Brent crude for May delivery, which had spiked to US$117 a barrel on Monday, dived shortly after those comments to a low of about US$85 at 8.30am on Tuesday morning.
It bounced back soon after, to US$90, and as of 4pm it was continuing to hover around that level.
That is up only about US$17 from its price just before the joint US and Israeli strikes on Iran.
However, the price of oil is not the only development putting pressure on fuel prices.
Much of the increase in the price of imported petrol and diesel has been caused by a jump in the refining margins at refineries in Asia and increased costs for shipping and insurance.
The 80% rise in the total cost of imported fuel reported by industry sources is in line with slightly-delayed data published by the Australian Institute of Petroleum.
It reported today that the key benchmark for the price of unleaded petrol in Australia and New Zealand ‒ the Singaporean MoGas95 benchmark ‒ had surged to US$210 a barrel on Monday.
That was up just over 80% on its pre-conflict level.
Energy Minister Simon Watts said the oil price movement was definitely in the right direction but the Government was “not counting our chickens”.
“This is a period of time where we are going to see volatility.”
Watts would not say whether he thought it was reasonable for petrol companies to increase their prices before the higher-priced imported fuel arrived at the pump, but said the Commerce Commission would be monitoring prices closely.
“They’re simply passing through the cost of the underlying product which is imported.
“The challenge and the responsibility of the regulator is to ensure that those price changes are fair and reasonable based on what we’re seeing on the international market, which is seeing significant volatility,” he said.
Westpac said in a research note published this morning that ‒ because of the turmoil in the Middle East ‒ it now expected inflation would remain close to 3% for most of this year, “cooling only modestly to 2.6%” by the end of the year.
“I think the right way to look at it is we’re not out of the woods,” Westpac chief economist Kelly Eckhold said with regard to the drop in the oil price.
“We don’t know really exactly where this will end up.”
Senior economist Satish Ranchhod said Westpac didn’t expect the Reserve Bank to respond to higher inflation by bringing forward a hike to the Official Cash Rate, given that more expensive fuel would also lower economic growth.
Both Westpac and the Reserve Bank are forecasting the OCR will be on hold until the final quarter of this year.