Fuel prices have surged to nearly four dollars a litre in some remote parts of the Northern Territory, as global oil markets react to escalating conflict involving Iran. In communities such as Ramingining and Milingimbi in Arnhem Land, diesel is already close to four dollars a litre, while city motorists are also facing steep prices well above two dollars a litre.

The nation’s largest motoring body has accused oil companies of using the Middle East crisis to increase profit margins beyond what is justified by wholesale costs. Economists note that global crude prices have climbed sharply, and further increases are possible if supply disruptions continue.

The greatest risk to prices stems from the effective closure of the Strait of Hormuz, a critical shipping corridor that carries about one fifth of the world’s traded oil. Shipping traffic through the passage has plunged after drone strikes, military threats and attacks on tankers, prompting insurers and shipping firms to halt voyages through the area.

Bank modelling suggests petrol prices in Australia could rise to around three dollars a litre if disruptions persist for weeks, and even higher under a prolonged shutdown. Analysts warn that sustained energy price spikes could lift inflation and potentially prompt interest rate increases, raising the prospect of the most severe energy shock in decades.