Oil is the world’s most important commodity, and its price can swing wildly. Here’s who and what sets it, and how it flows through to petrol prices in Australia.
No single person or country sets the price of oil. It is traded every day on global markets, and the price moves with supply, demand and expectations about both.
The prices you hear quoted are benchmarks, measured in U.S. dollars per barrel. A barrel is about 159 litres. Brent crude, based on oil from the North Sea, is the reference for most of the world’s oil, including much of what is used in Asia. West Texas Intermediate, or WTI, is the main U.S. benchmark.
Much of the trading happens in futures markets, where buyers and sellers agree on prices for oil to be delivered in coming months. That’s why prices react instantly to news, often before any physical supply has changed.
OPEC+, conflict and demand
On the supply side, the biggest single influence is OPEC, the Organization of the Petroleum Exporting Countries, led by Saudi Arabia. Since 2016, it has worked with other producers including Russia in a wider group known as OPEC+. By agreeing to pump more or less oil, the group can push prices up or down.
U.S. shale producers are another major force. The U.S. is now the world’s largest oil producer, and its output responds quickly to price changes.
Demand depends on the health of the global economy, especially the U.S. and China. Recessions cut demand and prices. Strong growth, the northern summer driving season and cold winters lift them.
Conflict can change everything quickly. About a fifth of the world’s oil normally passes through the Strait of Hormuz, between Iran and Oman. After the U.S. and Israel struck Iran in February 2026 and shipping through the strait was severely disrupted, Brent crude rose above US$100 a barrel for the first time in four years, and was above US$110 in late October.
From barrel to bowser
Australia imports most of its fuel already refined, largely from refineries in Asia. So the main benchmark for local petrol prices is the price of refined petrol in Singapore, rather than crude oil itself.
That price is then converted into Australian dollars, so a weaker Aussie dollar makes fuel more expensive. Shipping costs, fuel excise and GST are added, along with wholesale and retail margins.
Changes in global prices usually take one to two weeks to show up at the bowser. In the biggest cities, prices also move in regular cycles, rising sharply then falling slowly. The ACCC monitors fuel prices and publishes where cities are in their price cycles.
