Why are Australian fuel prices expected to increase at the end of June 2026?

The temporary 32-cent-per-litre fuel tax cut introduced by the Australian government is unlikely to be extended past June. Transport Minister Catherine King has advised motorists to operate on the assumption that this relief measure will end this month, which will cause prices at the pump to spike.

What exactly is the Australian fuel excise cut and how much did it save motorists?

The relief measure is a 32 per cent reduction consisting of a fuel excise cut of roughly 26 cents per litre and a 5.7-cent-per-litre GST rebate. It also included reducing the heavy vehicle road user charge to zero to support the trucking sector, which may still receive separate ongoing assistance.

How much has the fuel tax reduction cost the Australian government budget?

The temporary relief measure has cost the federal budget $2.9 billion, which equates to an expenditure of nearly $1 billion per month. Ending the program will ease this substantial fiscal pressure on the budget, allowing the government to reinstate the full fuel excise.

What is the expected impact on Sydney unleaded petrol and diesel prices if the excise cut ends?

Unleaded petrol in Sydney is expected to rise from $1.65 per litre to around $2.00 per litre if the relief ends. Similarly, Sydney diesel prices, which are currently sitting at $1.98 per litre, will face a corresponding sharp increase when the full tax is reintroduced.

How do current Australian fuel prices compare to the peak of the Middle East conflict?

Current pump prices are significantly cheaper than the peaks seen during the early weeks of the US, Israel, and Iran conflict. On March 31, Sydney unleaded petrol hit a high of $2.57 per litre, while diesel peaked at $3.21 per litre, compared to $1.65 and $1.98 today.

Image for illustrative purposes only. Not a real photo.

Motorists warned to brace for fuel tax hike

Written by Jon CuthbertPublished Jun 10, 2026, 10:16 PM

Motorists are being warned to brace for a sharp spike at the bowser, with the Albanese government signalling that the temporary fuel tax cut is unlikely to extend beyond June.

Transport Minister Catherine King cautioned that while a final decision will be left as late as possible due to global volatility, drivers should operate on the assumption that the relief will end this month.

The suspension of the measure would see the return of the full fuel excise, which, alongside a GST rebate and a paused heavy vehicle road user charge, has cost the budget $2.9 billion—nearly $1 billion a month.

However, government figures suggest fuel remains cheaper now than during the initial weeks of the conflict between the US, Israel, and Iran.

In Sydney, unleaded petrol peaked at $2.57 per litre on March 31 but has since fallen to $1.65; ending the 32-cent reduction would push prices back to around $2.00. Similarly, diesel has dropped from a high of $3.21 to $1.98 per litre.

As hostilities resume and inflation pressures mount, Prime Minister Anthony Albanese defended the government's management of the crisis, noting that Australia currently holds more fuel reserves than it did in late February.