Australian motorists are facing the prospect of another surge in petrol and diesel prices, with Ampol warning the expanding conflict in the Middle East is driving up global oil and refined fuel costs just as the Albanese government’s 16¢-a-litre excise relief is due to end.

Ampol, the nation’s largest fuel retailer, said the Iran war was no longer threatening just the Strait of Hormuz, but had spread to the Bab al-Mandeb Strait – another critical maritime choke-point for oil tankers linking the Red Sea to the open ocean.

The widening disruption has already triggered sharp increases to crude oil costs and refined fuel margins, known in the industry as “product cracks”, according to the company. If those elevated costs persist, they are expected to lift the price of imported fuel into Australia, and flow through to motorists in the weeks ahead.

“In recent weeks, we have seen a further escalation of geopolitical tensions in the Middle East, significantly reducing flows through the Strait of Hormuz, as well as threatening supply through the Bab al-Mandeb Strait,” the company said on Thursday. “As a result, we have seen a significant step-up in product cracks and crude premiums.”

The cost of crude oil, the natural resource that is refined into petrol, diesel and jet fuel, blew back above $US100 a barrel earlier this month after a renewed wave of Iran attacks brought tanker traffic in the Strait of Hormuz to a near standstill. Prices have retreated to below $US90 a barrel after the US and Iran briefly refrained from launching further attacks on each other, bringing renewed hopes that more supply may begin flowing through the region. But fighting has flared up again.

Energy markets now remain on edge about the heightened threat to shipping posed by the Iran-backed Houthi militia, which have claimed to have struck Saudi oil tankers in the Red Sea off the coast of Yemen with missiles and drones.

Since the conflict began, oil-rich Saudi Arabia has diverted millions of barrels of crude oil via overland pipelines to its port on the Red Sea, allowing exports to bypass the Strait of Hormuz and continue reaching overseas buyers.

This alternative route has proved hugely important for Asian oil refineries, which source most of their oil from the Middle East, and supply much of Australia’s imported petrol and diesel.

If the Houthis succeed in deterring shipping through the Bab al-Mandeb Strait, that would leave the Suez Canal to the north as the only exit point for oil tankers out of the region, and add pressure to dwindling global fuel supplies.

The renewed volatility comes at a particularly sensitive time for Australian motorists as the federal government’s 16¢-a-litre reduction to the fuel excise is due to end on August 2, restoring the full tax rate at a time when wholesale prices are already climbing.

After fuel prices soared in April to record national highs above $2.50 per litre for regular unleaded, motorists have been enjoying a period of relief, with prices even briefly sliding back to pre-conflict levels below $1.56 a litre for unleaded and $1.78 a litre for diesel, according to the Australian Institute of Petroleum. More recently, higher global oil prices have pushed average pump prices back to $1.82 for unleaded and $2.19 for diesel, even before the full excise is restored.

Despite the renewed pressure on prices, Australia’s major fuel companies and the Albanese government remain confident that domestic supplies remain stable, and enough tankers are still arriving on schedule to more than satisfy demand.

Major fuel importers, including Ampol and Viva Energy, are also participating in a federal government underwriting scheme designed to encourage them to buy all the fuel they can on global spot markets.

Ampol, which runs hundreds of service stations across Australia and owns the Lytton oil refinery in Brisbane, said it remained “well-placed to navigate the next phase of the conflict, should it persist”.

Chief executive Matt Halliday said this year’s conflict had caused “unprecedented disruption” to global energy markets, while placing extraordinary strain on global supply chains.

“As demand surged and supply tightened, our integrated supply chain came under enormous pressure but remained resilient,” he said.

“Our refinery performed very reliably, operating at maximum production and benefiting from rising prices for equivalent imported products.”

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