Australian motorists are finally seeing some relief at the petrol pump, new analysis shows, as steep falls in global oil prices start flowing through to service stations, wiping roughly 20¢ a litre off local fuel costs so far this month.
For the first time since August, average petrol and diesel prices have started to tumble nationwide, driven by a sharp 20 per cent drop in the cost of Tapis Crude, Australia’s regional oil benchmark, over the past fortnight.
NRMA figures to be released on Friday show the national average for regular unleaded has fallen by almost 22¢ since late October to $2.23 a litre. Diesel prices, meanwhile, have fallen by more than 20¢ to $2.71 a litre. At some service stations, unleaded has now dipped back below the $2 mark.
The price retreat comes as markets are responding to a long-awaited lift in Middle East oil shipments and signs that Donald Trump wants to de-escalate the Iran war following his party’s heavy losses in the United States midterm elections.
Some energy analysts are betting that the Democrats’ sweep of Congress will hike pressure on the Trump administration to reach a deal to end the war, now in its ninth month, noting that Trump has already struck a more conciliatory tone. In the past week, Trump has suggested that any new major strikes on Iran were unlikely and declared the conflict “effectively over”.
Brent oil, the global benchmark for crude, which was trading at nearly $US120 a barrel at the end of October, has fallen as low as $US90 a barrel this week.
Also helping drive down the price has been a recovery in Middle East oil production and exports out of the Persian Gulf.
While the conflict has crippled oil flows through the Strait of Hormuz , a narrow waterway off Iran’s coastline that usually carries about one in five of the world’s oil tankers, oil companies in Saudi Arabia and other Gulf nations have managed to divert significant volumes via pipelines to other ports.
The Commonwealth Bank this week said monthly oil flows out of the Middle East had been ranging between 80 per cent and 90 per cent since late September.
NRMA spokesperson Peter Khoury said a cooling of hostilities in the Middle East, paired with the comprehensive results from the United States midterm elections, had left global oil prices in freefall.
“Prices at home are falling and that is great news for families struggling with cost-of-living pressures and an over-heated economy,” he said.
However, he warned motorists were “not remotely out of the woods yet”, noting that the national average for regular unleaded remains almost 58¢ a litre higher than before the conflict began. ”We desperately need pre-war prices to return, but to get there we need a permanent peace with the Strait of Hormuz reopened to unrestricted trade,” Khoury said.
The NRMA’s analysis also found staggering price gaps of up to $1.06 a litre were emerging between the cheapest and most expensive available fuel in Sydney, Melbourne and Brisbane.
Khoury said the NRMA encouraged Australians to find the cheapest local service station before filling up because “now is not the time to be paying overs for fuel”.
Claudio Galimberti, chief economist at research firm Rystad Energy, said the US midterm election result had triggered one of the sharpest “repricing events” for oil in many years. But he warned the market was treating the Democratic victory as though it had resolved the Iran situation.
“It has not,” he said. “What has changed is the political cost of further escalation, not the geopolitical reality on the ground.”
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