The 16 cents a litre keeping petrol below $1.70 comes off on August 2, and the oil market is not waiting for the deadline. Brent crude settled at US$84.73 a barrel on Tuesday night, up 1.72 per cent, after touching US$87 for the first time since June.
The rise came on the day Donald Trump scrapped his 20 per cent Hormuz cargo fee and a US naval blockade of Iranian ports came into force. The fee lasted 26 hours. The barrel stayed up anyway, because the strikes on Iran continued: Brent's gain for the week is above 10 per cent, and West Texas Intermediate settled at US$79.34.
At the bowser the starting point keeps climbing. The ACCC's weekly monitoring report of July 10 put average petrol across the five largest cities at $1.68 a litre as at July 8, with diesel at $1.86, and said prices "continued to increase after excise was partially restored" at the start of the month.
The discount schedule is set in legislation. A 32 cent cut ran from April to June at a cost of $2.9 billion. It was halved to 16 cents for the month from July 1, worth about $11 on a 65 litre tank at a cost of about $400 million, and it ends on August 2, when excise reverts to the full indexed rate. "This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off," the Prime Minister said when he announced the July extension.
The government's own numbers show why the barrel matters more than usual. FuelPlan data current to July 10 puts petrol stocks at 1,758 megalitres, or 41 days of cover, and diesel at 3,433 megalitres, or 37 days, with 3.5 billion litres of fuel on the water toward Australian ports over the next four weeks. The International Energy Agency benchmark Australia is measured against is 90 days.
Households are carrying the sequence with almost no margin. The Westpac-Melbourne Institute consumer sentiment index rose 4.1 per cent to 83.9 on Tuesday, and Westpac's Matthew Hassan kept the number in its place: "At 83.9, the latest Index read is still in the bottom 10% of results over the 50-year history." The NRMA's Peter Khoury said of the past fortnight at the pump: "There's no doubt that markets have reacted."
Whether the discount survives August is now a live decision. Emergency Management Minister Kristy McBain said this week the government would monitor the situation, and Farm Weekly reports the call is due in the final week of July.
The ACCC's next weekly reading lands within days and will show what Tuesday's barrel does to the bowser. The excise decision has to come before August 2. On current prices, the discount would be ending just as the war premium arrives in full.
