Diesel prices across Australia could climb above $3 per litre as President Donald Trump considers cutting U.S. diesel exports, The Guardian reports. Fuel costs have risen to levels last seen in early April, adding pressure to inflation and making a further interest‑rate hike increasingly likely.

The potential export curtailment comes amid stalled negotiations with Iran, a move that could tighten global supply of diesel and push prices higher. The U.S. has historically been a major supplier of diesel to Australia, and any significant reduction in that flow would leave the domestic market more vulnerable to price swings.

Higher diesel prices feed directly into consumer costs and the broader consumer price index, which could accelerate inflationary expectations. Central banks, already monitoring rising fuel costs, may feel compelled to raise rates to keep inflation within target bands, further affecting borrowing costs for households and businesses.

Should the U.S. proceed with an export cut, Australian fuel prices could see a sharp uptick, prompting government and industry bodies to consider policy responses such as subsidies or strategic fuel reserves. Conversely, if the diplomatic talks with Iran resolve, the threat to diesel supplies may recede, stabilising prices and easing inflationary concerns.