What the shaky Iran ceasefire means for fuel prices

A fragile two-week ceasefire in the Middle East has sparked cautious optimism about the reopening of the Strait of Hormuz, a critical global oil and gas shipping route that has been largely blocked due to conflict. While oil prices dropped by about 15% following the ceasefire announcement, experts warn that the relief may be short-lived. With around 800 vessels still stranded and only a modest increase in daily throughput expected—10 to 15 ships compared to a normal 60–100—full recovery remains distant. Infrastructure damage across nine Middle Eastern countries, combined with slow restart timelines for production facilities, means global fuel supply will remain constrained. In Australia, where most fuel is imported, petrol and diesel prices remain high, and any price relief is unlikely to be immediate due to corporate caution and inventory dynamics. The Reserve Bank of Australia faces mounting pressure to act on inflation, which was already elevated due to domestic factors before the war. Now, with international energy costs adding further strain, the risk of stagflation looms, potentially triggering a global economic slowdown and increasing the likelihood of a recession in Australia. The long-term implications include the possibility of permanent tolls on the Strait of Hormuz, which could keep fuel prices above pre-war levels indefinitely.