Retail petrol prices

IBISWorld forecasts the average retail price of petrol to fall by 5.7% in 2023-24, to 195.8 cents per litre. The retail price of petrol is starting to correct downwards after spiking over the two years through 2022-23, due to the start of the Russia-Ukraine conflict. Nevertheless, the ongoing conflict is expected to limit the downwards correction, with retail petrol prices remaining well above pre-pandemic levels. Inflationary pressures across the supply chain, including high utilities, freight and storage fees, are anticipated to limit declines in petrol prices.

Petrol prices are correlated with the world price of crude oil and are directly affected by fluctuations in crude oil prices. Global oil prices are highly volatile, with a diverse range of factors affecting price movements, including exchange rates, foreign policy decisions, production levels and demand from downstream markets. Retail petrol prices in Australia are also influenced by overall fuel consumption and the number of motor vehicles on the road.

Over the past five years, global oil prices and consequently, domestic retail petrol prices, have been highly volatile. The COVID-19 pandemic created oversupply conditions in global oil markets, leading to a decline in retail petrol prices over the two years through 2020-21. The oil price war between Saudi Arabia and Russia in March 2020 amplified oversupply conditions in global markets. However, OPEC production cuts introduced in April 2020 provided some support for global oil prices. Oil prices surged in 2021-22 due to a combination of recovering demand conditions in the wake of the COVID-19 pandemic and the Russia-Ukraine conflict limiting global oil supply. As the world has adjusted their production and supply chains to the disruptions of the Russia-Ukraine conflict world crude oil prices dropped in 2022-23 and eased further in 2023-24, and this is beginning to flow through to Australian petrol prices in the current year. Overall, IBISWorld forecasts the average retail price of petrol to rise at a compound annual rate of 6.5% over the five years through 2023-24.