Prime Minister Anthony Albanese has extended the fuel excise cut for another month, making the decision 10 days before it was due to expire.

The flat-rate tax was cut by 32 cents per litre three months ago after war broke out in the Middle East, disrupting global oil supplies. 

A tentative truce this week has allowed cargo ships to resume transiting more freely through the Strait of Hormuz, but the loss of fuel supplies triggered by hostilities could take months to recover. How long the waterway stays open remains unclear.

The discount to fuel excise was scheduled to end on June 30, by which time it will have cost the Federal Budget an estimated $2.9billion in foregone revenue.

But on Saturday night, Albanese announced that it will be extended into July.

As a result, petrol and diesel will be 16 cents per litre cheaper than usual until August 2, reducing the cost of a 65 litre tank by about $11.

In addition, the Heavy Vehicle Road User Charge will be reduced by 16 cents for the same period to help truckies keep Australia moving.

Prior to the announcement, AMP economist Dr Shane Oliver warned the fragile global backdrop could see fuel costs spike again.

'Iran's nuclear program is still not fully resolved... all of which suggests that we are back where we were before the war started,' he said.

'If anything, Iran is now stronger having shown it can easily stop ships through the Strait of Hormuz.'

Dr Oliver warned oil markets were still pricing in the risk the conflict could flare up again, limiting any further price drops in the near term.

'It's already looking very fragile,' he said, pointing to delays in talks towards a permanent deal and ongoing fighting in southern Lebanon.

That uncertainty has prompted the government to step in again at the bowser, with Albanese saying the extension acknowledges households are still under pressure. 

'Whether it's cutting the fuel tax, the road user charge for truckies or tax cuts for every taxpayer, we're taking action to ease pressure on Australians,' he said in a statement.

'We'll continue to do what we can to shield Australians from the worst impacts of this conflict including securing additional fuel from our partners.'

Treasurer Jim Chalmers said the extra month of support would help soften the blow of petrol prices as broader cost-of-living pressures persist.

'Despite the welcome and substantial drop in the price of petrol recently, we recognise people are still under pressure,' Chalmers said.

'This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off.'

Australia has 44 days' worth of petrol in reserve, or about eight days more than when the US first bombed Iran in February, Energy Minister Chris Bowen said on Saturday.

Diesel stocks are running at 39 days and jet fuel at 32 days.

'Last week was the highest level of fuel held in Australia since the minimum stock obligation came into force in 2023,' Mr Bowen said.

'This week is the second highest at 6.3billion litres.'

There are 51 fuel tankers on the water and headed to Australia, with 3.9billion litres of fuel contracted for delivery in the next month.

The Australian Competition and Consumer Commission is continuing to monitor fuel prices to ensure the savings are passed on to motorists, backed by stronger penalties and enforcement powers.

According to the watchdog, average capital city bowser prices for petrol are hovering between $1.65 and $1.92 per litre. 

Dr Oliver said recent history suggests any oil price shocks are eventually followed by steep declines. However, he said that adjustment is likely years away.

'Past oil price shocks have eventually been followed by a big fall in prices as higher oil prices encourage more supply and kill more oil demand, and this time is unlikely to be any different,' he said.

'But that's more of an issue for 2027-28.'