Fuel Prices in Melbourne Could Hit $2.20 – What the Israel–Iran Conflict Means for You
Fuel prices in Melbourne may exceed $2.60/L in 2025 as the Israel–Iran war escalates and the U.S. joins the fight. Discover what this means for you and how to respond.
Why Every Melburnian Should Pay Attention to What’s Happening in the Middle East
Whilst it may seem like it is the other side of the world, the mounting wrangles between Iran and Israel which has now attracted the global giants such as the U.S. in the Middle East is already having practical effects on the economy of Melbourne- particularly at the gas station.
The cost of fuel in Australia is going up at an accelerated rate and Melbourne is not an exemption. During the past few weeks, the industry experts claimed that petrol prices might hit $2.20 a litre very soon, although there are chances of price hikes in case the conflict escalates.
Why Fuel Prices Is About to Get Even More Expensive
Here’s what’s causing the pressure:
- A major oil indicator, Brent crude oil, has increased by over 20 per cent within a span of one month and is trading on a high of US $85 per barrel.
- The analysts are cautioning that it might surge to US $100 in case of extension of the crisis.
- An extra dollar on crude oil usually translates to 1 cent increase on the pumps in Australia.
This implies that the petrol prices in Melbourne which is at approximately 178.6 cents currently could easily increase to a dollar or even more at the current rate of 220 cents.
“If this becomes a drawn-out affair, we could see crude oil prices spike above $100 without too many troubles.”
— Tony Sycamore, IG Australia
It’s Not Just Fuel—It’s Everything
The consequences of rising oil prices don’t stop at the border.
According to MST Financial’s Saul Kavonic, the entire supply chain is vulnerable:
“Nearly everything you buy day-to-day has energy as a core input. If oil prices remain high, you’ll see cost increases across the board—groceries, electricity, flights, freight.”
Local Impacts in Melbourne:
| Area | What to Expect |
| ⛽ Fuel Prices | Unleaded petrol could hit $2.20–$2.60/L or more in coming weeks |
| 🛒 Groceries | Rising freight costs could raise prices for food, produce, and everyday items |
| 📦 Small Businesses | Increased logistics costs may hit delivery-heavy businesses the hardest |
| ✈️ Air Travel | Higher jet fuel costs = higher domestic & international flight prices |
| 🏠 Households | Pressure on family budgets, especially in outer suburbs like Werribee or Epping |
What Happens If the Strait of Hormuz Is Blocked?
The Strait of Hormuz between Oman and Iran, where a lot of the shipping occurs, is one of the biggest threats today:
- One fifth of the worldwide oil consumption
- A quarter of the world liquefied natural gas (LNG) trade
Should Iran close or otherwise interfere with this passage the world oil supply may be throttled-the price (Fuel Prices) may well go above the $150/barrel price range and bring on a world energy crisis of biblical proportions.
“If Iran closes the Strait permanently, it could directly draw the U.S. and its allies into the war to secure global energy routes.”
— Saul Kavonic, Energy Analyst
Inflation, Rate Hikes, and the RBA’s Dilemma
This sudden surge in petrol (Fuel Prices) and gas may rekindle inflation which may make it difficult to reduce interest rates as planned by the Reserve Bank of Australia.
Tony Sycamore warns that:
“The RBA could be forced to delay or even reverse rate cuts, making mortgages, rents, and loans more expensive across Victoria.”
Both Sycamore and Kavonic reckon that there is a 30-40% risk of international recession which depends on the manner in which the conflict can be handled.
What Melburnians Can Do to Stay Ahead
Don’t wait for prices to hit crisis levels. Here’s how you can act now:
🚗 Save on Fuel:
- Use apps like FuelCheck VIC or Motormouth to spot low prices
- Fill up mid-week when prices are generally lower
- Maintain your vehicle: properly inflated tyres and smooth driving reduce fuel use
🚋 Rethink Travel:
- Opt for public transport, especially during price spikes
- Combine trips or carpool where possible
📣 Get Informed & Speak Up:
- Support local and national calls for temporary fuel excise relief
- Advocate for investment in renewables to reduce dependency on global oil
Stay Informed – Before It Hits Your Wallet
Don’t let rising prices catch you off guard.
Subscribe to our free Melbourne fuel price alert newsletter for:✅ Weekly price forecasts
✅ Tips to save at the pump
✅ Policy updates and cost-of-living insights
Don’t Wait Until It’s Too Late
Hundreds of dollars of additional annual amount of Fuel Prices expenses could be paid by the average Melbourne household in case the prices rise to 2.60 2.80 per litre-which could happen according to certain economists in case the situation in the Middle East gets aggravated. However, when you have access to timely updates and make wise use of strategy, you cannot become a victim of overpaying and making the right decision prior to reaching the peak of prices.
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