The National Roads and Motorists’ Association (NRMA) has warned that securing crude oil remains Australia’s main fuel challenge as the Middle East conflict continues, with potential implications for transport costs and motor insurance exposures in the months ahead.
NRMA spokesman Peter Khoury told ABC Radio Sydney that recent falls in international oil prices are flowing through to Australian wholesale markets and beginning to appear at service stations, with unleaded petrol expected to fall below $2 a litre in every capital city in coming days. He said federal arrangements have bolstered Australia’s crude oil and refined product supplies in the near term. “It can give Australians some comfort at least that, you know, if we go back to what we were doing before the war and buying fuel when we need it, it should be enough supply in the country to get us through into the next couple of months. And then obviously beyond that, the government’s going to have to keep doing what it's doing,” Khoury said. NRMA’s comments indicate that stocks and contracted supply could extend to around the end of June. Any further disruption or easing in global flows after that point may affect transport costs, freight activity, and motor claims trends.
In an explainer published earlier this month, NRMA outlined why diesel prices have moved higher than petrol in 2026, despite the halving of the fuel excise across the board. At the time of its analysis, average diesel prices in Sydney were around 309 cents per litre, compared with 225 cents per litre for regular unleaded. NRMA attributed part of the differential to fuel quality changes, as diesel now has lower sulphur content to meet emissions standards. This requires additional refining steps and increases production costs. Global demand is another contributor. Diesel is widely used in shipping, power generation, transport, and trucking. Expanding activity in large economies such as India and China over the past two decades has supported sustained demand for diesel relative to petrol.
The current Middle East conflict has added pressure because refineries optimise output based on crude type and product margins, and Middle Eastern crude grades are regarded as efficient for producing diesel. Disruptions to those supplies have had a greater impact on diesel than on petrol, echoing patterns observed during the early phase of the Russia‑Ukraine conflict in 2022. Diesel and petrol also follow different international benchmarks. Regular unleaded is linked to Mogas 95, while diesel tracks Gasoil. Since the latest conflict began, Mogas 95 has risen about US$50 per barrel, while Gasoil has increased around US$124 per barrel, leading to a larger price rise for diesel.
NRMA’s breakdown of the domestic market shows why diesel prices behave differently from petrol at the retail level. Around two‑thirds of diesel consumed in Australia is sold to commercial customers, including miners, farmers, and transport operators, typically under forward contracts. Over the 12 months to January 2026, about 10.6 billion out of 33.6 billion litres of diesel – or 31.4% – went through the retail market. In contrast, petrol is mainly a retail product. About 76% of petrol sales are to retail buyers, accounting for a 15.8 billion litre market. This structure makes petrol prices more sensitive to discounting cycles, while diesel pricing is more exposed to global supply‑demand conditions and contracted volumes. Recent increases in diesel demand – linked to higher truck movements, household stockpiling of goods, and seasonal peaks in mining and agriculture – have added further short‑term pressure. These developments can affect the cost base and operating patterns of heavy motor and fleet customers, with flow‑on effects for claims costs and pricing assumptions.
Oil markets shifted on April 8 after a two‑week ceasefire between the US and Iran was announced, with Brent crude briefly falling by up to 17% before trading near US$95 a barrel. Market participants expect that any resumption of shipping through the Strait of Hormuz could reduce supply risks and lower input costs for refineries in Asia and Australia. “If the ceasefire holds and becomes permanent then we will see significant falls, but certainly in the short term what we have seen today we hope will flow on to the Asian markets and if that is the case wholesale prices will obviously fall here in Australia,” Khoury said. Any decline in wholesale benchmarks would then work through supply chains before being reflected in retail prices.
Higher fuel prices are coinciding with shifts in vehicle preferences and motor insurance pricing, according to new data from Compare the Market. The comparison site’s latest electric vehicle (EV) insurance index shows that average quoted comprehensive premiums for battery electric vehicles (BEVs) increased 10.2% in the 12 months to March 2026. Over the same period, hybrid and plug‑in hybrid models recorded an average premium rise of 6.6%.
The biannual index is based on average quoted premiums from 11 insurers and six underwriters across a defined set of BEV and hybrid models. In March 2026, the average quoted comprehensive premium for a BEV in the sample was about $2,300, up from $2,071 in March 2025. Hybrids and plug‑in hybrids averaged about $1,700, compared with $1,597 a year earlier. Compare the Market said its separate analysis continues to find that EVs are, on average, more expensive to insure than comparable petrol and diesel vehicles, reflecting differences in repair techniques, parts, and availability of specialist repairers.
Polling undertaken for Compare the Market indicates that fuel costs are influencing future vehicle choices. More than 54% of surveyed Australians said they would consider an electric or hybrid model for their next vehicle. Almost 7% reported that recent fuel price increases had led them to think about an EV for the first time. Around 24.9% said higher fuel costs had strengthened an existing intention to choose an EV, while 22.5% indicated they would look at a hybrid with lower fuel use. NRMA’s warning on crude supply, elevated diesel prices, and emerging shifts in vehicle demand are informing motor portfolio strategy. Underwriters are adjusting pricing, repair networks, and product design as they respond to short‑term fuel volatility and the gradual change in Australia’s vehicle fleet.
