Retail diesel prices

IBISWorld forecasts average retail diesel prices to fall by 0.3% in 2025-26, to 184.4 cents per litre. Growth is expected to be slow as forecasts of global economic growth remain weak, limiting demand, while supply conditions have improved in recent years as OPEC has made multiple decisions to raise production levels. Indeed, in late 2025, there are emerging concens of a global oversupply of petroleum products, which could further weigh on diesel prices in 2025-26.

Domestic diesel prices are driven mainly by fluctuations in global prices, particularly movements in the Singapore benchmark price. According to the ACCC, price changes in the Singapore benchmark take approximately two weeks to work their way through the Australian supply chain. Diesel prices are also influenced by fluctuations in the world price of crude oil, refining costs and taxes. According to the AIP, approximately 60% of diesel sold in Australia is imported from overseas, primarily from Japan, South Korea and Singapore. As crude oil is generally priced in US dollars, the value of the Australian dollar relative to the US dollar can also affect retail diesel prices. Likewise, diesel prices are influenced by supply and demand conditions and excise levels in the domestic market. Before the temporary six-month reduction, excise on diesel stood at 44.2 cents per litre. The excise on fuel is indexed twice annually in February and August, in line with the consumer price index. According to the AIP, around 25% of diesel is sold to retail customers, with the remainder primarily sold in bulk to commercial customers. Key users of diesel include road freight operators, agricultural producers and operators in the mining sector.

The world price of crude oil is highly correlated with fuel prices in international markets and has displayed volatility in recent years. Global oil prices soared in 2021-22 due to the start of the Russia-Ukraine conflict and a recovery from weaker prices at the height of the pandemic. Prices started to ease in 2023-24 as supply conditions have improved, leading to retail diesel prices declining over the three years through 2025-26. Overall, IBISWorld anticipates average retail diesel prices to rise at a compound annual rate of 8.0% over the five years through 2025-26, off a low base year in 2020-21.