The conflict that broke out in the Middle East in late February 2026 is now showing up at Australian fuel pumps. Shipping through the Strait of Hormuz, which carries roughly a quarter of the world’s seaborne oil trade, has been largely blocked since 28 February. Brent crude surged 10 to 13% within days, settling around US$80 to US$82 a barrel. Australian retail petrol and diesel prices have risen sharply through early March from their mid-February levels.
For most small businesses the question is not whether costs rise; it is how far the increase spreads through the business and what can be done about it.
Where the pressure shows up
Fuel is rarely just one line in the budget. The flow-through effects to watch:
- Freight and delivery surcharges. Carriers tend to pass fuel increases through quickly, so expect surcharge notices if you have not already received them.
- Input costs in fuel-exposed sectors. Agriculture, trades and transport-exposed businesses feel the increase first and hardest, both in their own tanks and in what their suppliers charge.
- Renewed inflation pressure. The RBA raised the cash rate to 3.85% on 3 February citing inflation concerns. Dearer fuel adds to the very pressure the Bank was already worried about.
The partial offset: fuel tax credits
Eligible businesses get some relief through fuel tax credits, which were indexed up from 2 February 2026. The current rates are 20.2 cents per litre for heavy vehicles on public roads and 52.6 cents per litre for off-road business use. If you claim, make sure your BAS uses the new rates; claiming at the old rates leaves money on the table at exactly the moment fuel is costing you more.
Practical steps
- Add or review fuel levies and freight surcharge clauses in contracts. If your standard terms do not let you pass through fuel increases, fix that before signing the next job.
- Shorten quote validity periods. A quote priced on mid-February fuel costs may not survive contact with March invoices. Thirty days may now be too long; consider seven or fourteen.
- Review route and load planning. Fewer trips, fuller loads and tighter scheduling are the fastest savings available without touching prices.
- Consider fixed-price supply contracts where sensible. Locking in supply costs can be worth it for fuel-heavy operations, provided the terms suit your volumes.
- Check your fuel tax credit claims are correct and up to date. Make sure you are claiming everything you are entitled to and at the current rates.
How long will it last?
Nobody knows; it would be a mistake to build a plan that depends on a quick resolution. The disruption to the Strait of Hormuz is significant; even if shipping resumes, prices may take time to settle. The safer assumption for planning purposes is that elevated fuel costs persist for some months, with the option to unwind levies and surcharges if conditions improve sooner.
Before you act
This update is general information only and is not tax or financial advice. Fuel tax credit eligibility and rates have detail behind them that depends on your circumstances. Confirm your claims with a registered tax agent and check official sources before acting.