Hunter drivers hit as fuel surges to near record prices and government rules out further excise cuts

The cost of diesel at the pump was approaching $3 per litre again in the Hunter at the weekend amid consistently skyrocketing prices since excise cuts ended in June.

The average price of fuel in the region had risen by more than 22 cents this week as as the conflict in the Middle East continues to escalate and market analysts warn without relief the outlook is bleak.

Commodities experts at the Commonwealth Bank estimate that oil markets have five 10 weeks before global oil and refined product inventories deplete, which could send the cost of oil skyrocketing to as much as $US150 a barrel.

If that happens, fuel prices could climb by another 40 cents a litre, AMP chief economist Shane Oliver said.

"If the East-West pipeline remains shut and the flow of oil remains limited through the Strait of Hormuz... you can't keep running down global oil reserves forever. Eventually the world would have to adjust to a lower supply," he told AAP.

Prices across Newcastle varied by as much as 65 cents this week, according to the state's trend data, with even the most affordable varieties surging past $2.20 per litre.

The lowest prices in the suburbs on Saturday morning were about $2.27 per litre, with premium types reaching as high as $2.70.

Diesel ranged from the most affordable at $2.69 to as high as $2.90.

Despite the price increases, the federal government was not considering cutting the fuel excise.

"We're providing cost-of-living relief in other permanent ways," Treasurer Jim Chalmers told reporters on Friday.

"Right around the world, ordinary people are being absolutely smashed by the consequences of the war in Iran, and unfortunately Australia is no different."

He also acknowledged that the US war in Iran had been disastrous economically.

The conflict has caused chaos in the Strait of Hormuz and fuel supplies have been further strained by a drone attack on Saudi Arabia's East-West oil pipeline, prompting global oil prices to surge.

Mr Oliver said cutting the fuel excise would be costly for the budget without solving the problem.

"We did it six months ago and it just provided temporary relief and here we are going back up again," he said.

The federal government's cuts to the excise in April had delivered steady relief for Hunter drivers after record price spikes when diesel surpassed $3 per litre for the first time in March.

Stations across the state were stricken by shortages, sparking prolonged fears for national supplies and the long-reaching fallout of the conflict abroad.

NRMA spokesman Peter Khoury said what was really needed to provide relief at the bowser was a de-escalation of violence in the Middle East.

If that were achieved, "what we'll see is those prices go back, that's how volatile they are," Mr Khoury said.

"The markets are responding pretty quickly to what's going on, but until that happens, unfortunately we're going to continue to see these high prices."

Residents had turned to any alternatives during this year's earlier price surge as costs rose for almost everything.

AAP reported this week, after oil prices broke the psychologically significant $US100 a barrel barrier and attacks in the Strait of Hormuz increased, that worsening conflict abroad would drive up inflation in the national economy.

Saudi Arabia has shut its east-west pipeline after a drone attack, shutting a key Hormuz bypass, with the oil-rich nation's crude production tumbling by 1.9 million barrels a day in August to the lowest level since the conflict began, economists at ANZ said.

The increased attacks have already affected exports of crude oil and refined fuel products from the Persian Gulf, but further pressure on prices was likely to come from the advance of Iran's Houthi allies in Yemen.

"Riyadh has now lost the option to use western exports if the Strait of Hormuz deteriorates again," ANZ analysts said on Monday.

Reserve Bank governor Michele Bullock has previously said the board might have to raise interest rates further if upside risks to inflation emerged.

This story includes reporting by AAP.