The price of a full tank
A war in the Gulf, damaged refineries in Russia and a tax that came back. How fuel got this expensive in Melbourne and Colombo, and what you can do about it.
Every oil shock follows the same script. In 1973, during a war in the Middle East, Arab members of OPEC placed an oil embargo on several countries. The price of a barrel first doubled, then quadrupled, and cars waited in long lines for petrol. The embargo held until March 1974. The lesson stuck: when supply is threatened at a single point, the whole world pays.
In 2026, that point is the Strait of Hormuz. When war broke out in the Gulf region on 28 February, the world’s busiest oil route became a war zone.
1. The narrow door
In 2024, about 20 million barrels of oil a day passed through the strait, the narrow sea lane between Iran and the Arabian Peninsula. That was about a fifth of all the oil the world used. In September 2026, flows through the strait were 10.9 million barrels a day, the IEA says: just over half the 2024 level.
Freeze frame
Picture a stadium with five exits. Close one of them, and everyone still gets out eventually. But nobody walks calmly. They push.
Oil traders are the crowd. When one exit closes, they don’t wait to see how bad it gets. They pay more now, in case it’s worse tomorrow.
2. The fever chart
Brent crude, the benchmark for most of the world’s oil, closed at US$71.32 a barrel on 27 February. By 7 April it was US$138.21, almost double. Then it fell all the way back. On 2 July it closed at US$68.53, below its pre-war level.
It didn’t stay there. Military strikes resumed on 7 July, according to the US Energy Information Administration, and in September oil tankers and pumping stations on Saudi Arabia’s East-West pipeline came under attack. On 14 October Brent closed at US$126.55. The same day, the International Energy Agency (IEA) warned that “renewed attacks in the Gulf leave the recovery fragile.”
Brent crude, US dollars a barrel, every trading day of 2026
3. Why diesel costs more
In Melbourne, diesel averaged 281.8 cents a litre in the week to 11 October, against 240.4 cents for unleaded. That’s a gap of about 41 cents.
The IEA points to two causes. Shipments of refined fuel from the Middle East were 1.9 million barrels a day in September, still below half their pre-war level of 4.7 million. And damage to Russian refineries during the war in Ukraine has cut their diesel output. Together, lost diesel exports from Russia and the Middle East came to 1.3 million barrels a day, only partly made up by other suppliers. Wholesale diesel reached record highs of around US$220 a barrel in Europe and the United States in September, and the IEA expects the market to stay tight well into 2027.
Freeze frame
Think of the world’s fuel supply as a bathtub. Tankers and refineries fill it, and every car, truck and generator drains it. Since February, the taps have run slower than the drain.
By the end of September, global oil stocks were 509 million barrels lower than at the end of February, the IEA says, and stocks held on land were at their lowest since at least 2016. With so little in reserve, each new disruption moves the price further.
4. The tax that came back
Australia added a local twist. On 30 March, the federal government halved fuel excise, the tax built into every litre. With the states agreeing to hand back their extra GST from higher fuel prices, the total cut came to 32 cents a litre from 1 April to 30 June. From 1 July a smaller 16-cent cut applied. On 2 August it ended.
Excise is back at its full rate, now 53.7 cents a litre after its regular August increase. Add GST, and nearly a third of what you pay at the bowser is tax.
Where a $2.40 litre of unleaded goes
5. Colombo and Melbourne, side by side
In Sri Lanka, the Ceylon Petroleum Corporation announced a price revision from midnight on 30 September, the Daily Mirror reported: Petrol 92 went up Rs 15 to Rs 414 a litre, Auto Diesel Rs 10 to Rs 392 and Super Diesel Rs 50 to Rs 528. Petrol 95 stayed at Rs 475 and kerosene at Rs 285. At about Rs 230 to the Australian dollar (People’s Bank, 16 October), here’s how a litre compares:
At the pump, Colombo is cheaper. Against wages, it’s the other way round. Sri Lanka’s minimum wage is Rs 1,200 a day, which buys 2.9 litres of petrol. Australia’s is A$1,004.90 for a full-time week; a day’s share, A$200.98, buys about 84 litres in Melbourne. Even so, an 80-litre diesel tank in Melbourne costs about A$225.
6. What you can do
See every price before you drive. Servo Saver, in the free Service Victoria app, shows live prices at more than 1,200 service stations. Each station’s maximum price is set for 24 hours from 6am, and tomorrow’s is published by 4pm. If tomorrow is higher, fill up tonight. How Servo Saver works
Lock a price for a week. The My 7-Eleven app’s Fuel Price Lock holds the best nearby price for 7 days, for up to 150 litres. It saves you up to 25c a litre. Fuel Price Lock terms
Check your energy company’s app. EnergyAustralia electricity and gas customers get 6c a litre off at 7-Eleven, up to 100 litres a fill, by scanning a barcode in the EnergyAustralia app. It can’t be used together with a price lock. Other energy companies, banks and motoring clubs run similar deals, so check yours. Offer terms
Leave the car, take the train. All Victorian public transport, metropolitan and regional, is half price until 1 January 2027, including V/Line seat bookings. For a show in the city, that can cost a fraction of the fuel. Half-price travel
Sources: US Department of State, Office of the Historian, Oil Embargo, 1973–1974; US Energy Information Administration: Strait of Hormuz (16 June 2025), third-quarter oil prices (5 October 2026) and Europe Brent Spot Price FOB, daily; IEA, Oil Market Report, October 2026 (14 October); Prime Minister of Australia media releases, 30 March, 2 April and 21 June 2026; Australian Taxation Office; Australian Institute of Petroleum, weekly petrol and diesel reports, week ending 11 October 2026; Ceylon Petroleum Corporation fuel price revision, as reported by the Daily Mirror (Chaturanga Pradeep Samarawickrama, 30 September 2026); Fair Work Ombudsman; National Minimum Wage of Workers (Amendment) Act, No. 11 of 2025; People's Bank; Consumer Affairs Victoria, Servo Saver and price reporting rules; 7-Eleven; EnergyAustralia; Transport Victoria. Conversions and comparisons are our own calculations. Offers can change, so check the terms before you rely on them. The Dosage has no commercial arrangement with any company named.
General information, not financial advice.
Use of AI: the illustrations in this story were made with AI tools and checked by our editor. Spotted an error? Email info@thedosagemag.com