Recently-tightened European Union sanctions on Russian oil could drive prices up and continue to shake global markets, experts say, which could lead to Australian drivers paying more for fuel and have a flow-on effect of increasing goods prices.
Australia's inflation has risen again, up 1.3 per cent in the September quarter and 3.2 per cent over the year — the first increase in underlying inflation since late 2022, when the full-scale invasion of Ukraine sent global fuel prices soaring.
Just as in 2022, higher power and transport costs remain key drivers of inflation.
At the same time, new data from the Centre for Research on Energy and Clean Air (CREA) shows several sanctioned Russian "shadow fleet" tankers continue to appear in Australian-linked supply chains.
CREA analyst Vaibhav Raghunandan told SBS Russian that while Australia's direct exposure to Russian oil is limited, the EU's "net importer" sanctions model could restrict supply and push prices higher.
While Australia doesn't buy oil directly from Russia, global benchmarks move quickly — and those shifts often reach local pumps within weeks.
Ripple effects travel fast
Tony Sycamore, market analyst at IG Australia, said recent United States and EU sanctions on Russian oil giants Rosneft and Lukoil have already started reshaping trade flows in Asia.
"China's state oil companies have reportedly suspended seaborne purchases of Russian oil, and Indian refiners are reassessing their imports," he said.
"We may now be at a turning point, where higher oil prices could begin to flow through to Australian motorists over the next few weeks."
Brent crude, the global benchmark underpinning most imported fuel prices in the Asia-Pacific, climbed from lows nearing US$55 ($83) in September to about US$66 ($100) a barrel last week.
"Generally, a $1 change in crude translates to about a 1-cent change at the pump," Sycamore said.
In a statement to SBS Russian, the Australian Competition and Consumer Commission (ACCC) said retail fuel prices are "largely determined by movements in international benchmark refined-fuel prices (which are driven by international crude-oil prices) and the AUD-USD exchange rate".
Changes in these benchmarks, the ACCC said, usually take about two weeks to filter through to major cities, and longer in regional areas.
Oil prices often rise and fall in response to geopolitical flare-ups, and Sycamore said recent events have shown how quickly those swings can reverse.
"Back in June, there were concerns that the 12-day conflict between Israel and Iran would push oil above $100. It peaked around $78, then dropped again once that conflict ended."
But not all shocks fade as fast. According to the Australian Institute of Petroleum, diesel prices in Australia hit record highs after Russia's full-scale invasion of Ukraine — surging above $2.20 a litre in late 2022, up from lows near $1.20 in 2020.
Prices have stayed elevated since, hovering between the high $1.70s and low $2 range through 2023–24.
With recent sanctions and attacks on Russian energy infrastructure, analysts warn that volatility could intensify.
"The scope for Ukraine to ratchet up its attacks on Russian energy infrastructure, or stricter sanctions on Russian crude exports, could lead to a more significant market disruption and higher prices at the pump," said Saul Kavonic, head of energy research at financial services firm MST Marquee.
Australia's fuel dependence and limited storage
According to the Australia Institute think tank, about 91 per cent of Australia's fuel consumption is met by imports.
That reliance is compounded by limited domestic storage. The Australian Financial Review reported this month, referring to government data, that Australia had oil stores equivalent to 49 days' worth of net imports, which is far below the 90-day requirement under the International Energy Agency treaty.
The Department of Climate Change, Energy, the Environment and Water (DCCEEW) reported that in July, Australia held just 20 days of jet fuel, 24 days of diesel and 28 days of petrol.
How global prices flow to Australian pumps
Most of Australia's refined fuel imports come from Singapore, South Korea and Japan, with smaller volumes from India and Malaysia, according to the DCCEEW statistics.
As a result, Australian fuel prices are largely driven by the Singapore benchmark — a daily regional price guide published by S&P Global Commodity Insights, also known as Platts. When oil prices, refinery costs, or shipping rates rise in Singapore, those increases flow directly through to Australian wholesalers and, within about two weeks, to drivers at the pump.
S&P Global's Premasish Das says sanctions on Russian oil usually redirect trade rather than reduce it, but that rerouting drives up freight and insurance costs.
"The EU sanctions on fuels produced from Russian oil could potentially displace more than 300,000 barrels a day of diesel shipments to the EU from India and Turkey," he said.
"This shift could fragment the diesel trade and clean-tanker [ships that carry refined fuel products] markets, making them more expensive. … Given Australia's reliance on imports, this will likely lead to increased fuel prices as well."
Refiners and traders also use similar data from London-based firm Argus Media to monitor price trends across the region.
Cara Wong, Asia-Pacific associate editor at Argus Media, said those shifts are already visible in Russia's export data.
"We're seeing more damage to Russian refining infrastructure, and loading data is already showing a drop in diesel exports," she said.
"Although Australia doesn't buy directly from Russia, it affects the entire diesel market because it tightens supplies a little bit more … Further restrictions on fuels made from Russian crude would have an outsized impact on Singapore benchmarks."
Disruptions to Russian oil refining
Beyond sanctions, Russia's own refining sector has come under sustained attack. Ukrainian drone strikes have disabled a significant share of its capacity.
By late September, more than 38 per cent of refining infrastructure was offline, according to analysts cited by news agencies Reuters and Lenta.
Russia has since extended its fuel-export ban until the end of 2025 to stabilise domestic supplies.
Tatiana Mitrova, global fellow at Columbia University's Center on Global Energy Policy, told SBS Russian that the cumulative impact of these strikes is proving difficult to reverse.
"Equipment shortages, sanctions on repairs and a new wave of attacks are prolonging Russia's recovery," she said.
"As a result, export volumes are shrinking just as demand rises into the Northern Hemisphere winter."
Analysts say these disruptions add to the broader mix of geopolitical and market pressures already shaping global prices.
Sycamore said that, as well as sanctions on Russia, other global shifts are also feeding volatility; namely, US-trade tensions affecting global demand for crude oil.
However, recent signs of progress in US–China trade talks have lifted market confidence and pushed the Australian dollar higher against the US dollar, with some analysts predicting it could trade as high as 70 US cents.
A stronger dollar can take some pressure off local fuel prices, Sycamore said.
"Importantly, OPEC has been increasing production — partly to offset the impact of Russian embargoes, but also to regain market share," he said.
Mitrova said the global market has so far proven resilient.
"When the EU restricted imports, it narrowed Russia's export niche, mainly for diesel. But the global oil products market is highly flexible," she said.
She said these measures create logistical difficulties rather than a genuine shortage.
"Finding new buyers, rearranging shipments, and processing transactions under sanctions takes time and money, but the trade continues," she said.
A similar pattern occurred in 2022, when sanctions on Russian oil disrupted trade routes and raised freight and refining costs globally, contributing to Australian pump prices climbing above $2.20 a litre.
According to the Australian Institute of Petroleum, wholesale diesel currently sits around $1.66–$1.67 a litre, while average retail prices in Sydney are about $1.82 a litre, based on the latest NRMA data.
This story was produced in collaboration with SBS Russian.
