PM Calls Emergency National Cabinet as Diesel Passes Three Dollars a Litre and Experts Warn of Three Rate Rise Equivalent

Government preparing for oil above US$120 a barrel as NSW takes extraordinary action to secure fuel supplies

Zotpaper•Wednesday 25 March 2026 at 6:02 pm•2 min read•📰 6 sources

Prime Minister Anthony Albanese has called a national cabinet meeting to address the escalating fuel crisis as diesel prices pass three dollars a litre nationwide, with economists warning the economic shock is equivalent to three interest rate rises hitting households simultaneously.

The federal government is preparing for scenarios where global oil prices spike above US$120 a barrel, a level that would push petrol prices to unprecedented heights and threaten supply chains across the country. Treasurer Jim Chalmers confirmed that expanding ethanol mandates nationally is among the options under consideration as the government scrambles for solutions.

NSW Premier Chris Minns has taken extraordinary unilateral action to secure the state's share of diminishing national oil supplies, highlighting the growing tension between states as fuel stocks remain at the same critically low levels recorded when the US and Israel launched military operations against Iran a month ago.

The national cabinet meeting will focus on creating a consistent cross-state message around fuel conservation measures, with talks underway about light-touch approaches to reducing consumption. Energy analysts have warned that without coordinated action, the economic impact on households and businesses could be devastating, with transport costs flowing through to every sector of the economy.

Analysis

Why This Matters

The fuel crisis has moved from a supply concern to a full economic emergency. When experts compare fuel price impacts to three interest rate rises, they are describing a shock that compounds the pain already felt by mortgage holders who endured the fastest rate-tightening cycle in a generation.

Background

Australia's fuel vulnerability has been exposed by the Iran conflict. The country imports the vast majority of its refined fuel and holds relatively thin strategic reserves compared to other developed nations. The government was warned of this risk nine months before the war began.

Key Perspectives

The states are now competing for limited fuel supplies rather than cooperating, with NSW's unilateral action signalling that national coordination is failing. Expanding ethanol mandates could provide modest relief but would take months to scale.

What to Watch

Whether the national cabinet produces binding fuel allocation agreements or merely aspirational targets. If oil breaches US$120, expect rationing discussions to move from theoretical to urgent within days.

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