The oil shock that hit in late February has partially unwound. But copper is surging, the fuel excise snaps back on 1 July, and material prices already banked are not coming back down. Here is what builders need to know right now.
Updated June 2026
When this article first published in April, the Strait of Hormuz was effectively closed and petroleum-linked material prices were climbing fast. A US-Iran memorandum of understanding was signed on 17 June 2026, and Brent crude has since fallen back to around US$78 per barrel, roughly where it stood before the conflict began.
That is good news. But it does not mean builders are off the hook.
Oil-linked materials are easing slowly, not fully. Prices already locked into supply chains are largely sticky. Copper has gone the other way entirely, holding near record highs with forecasts revised upward. And on 1 July 2026, the halved fuel excise that has been cushioning construction fleet costs for three months expires.
The shock has split in two: one part unwinding, one part entrenching.
The Oil Picture: Relief Is Real But Lagged
On 28 February 2026, US and Israeli forces struck Iran, and Iran closed the Strait of Hormuz in response. Crude rose more than 50 per cent during the conflict, peaking above US$126 per barrel. The disruption became, by some measures, the largest oil supply shock in the history of the global market.
The deal signed at Versailles on 17 June called for the Strait to reopen toll-free for 60 days, and oil markets responded quickly. Brent fell to around US$78 per barrel, sitting only about 7 per cent above where it was before the conflict opened.
But the physical reopening and the commercial reopening are two different events. As of late June, the Strait remains contested. Iran re-declared closure on 20 June over alleged Israeli violations of the Lebanon ceasefire. US Central Command disputed the claim and reported 55 merchant ships transiting on 20 June alone. The 60-day memorandum period is fragile.
Even under a best-case scenario, shipping analysts warn the backlog is significant. Kpler estimates that clearing stranded tankers could take 10 to 15 days, and a full recovery of throughput could take months. Mine-clearing alone may take six months. War-risk insurance premiums remain substantially elevated above pre-war levels.
What this means for builders: Petroleum-derived material prices will ease. They will not reverse. The increases already banked into supply chains are largely sticky. Expect modest reductions on PVC pipes, polyethylene, membranes, adhesives, coatings, and foam insulation over coming months, not the sharp snap-back crude prices might suggest.
| Petroleum-linked Material | Direction | Note |
| PVC pipes | Easing (slow) | Prices lag crude by weeks to months |
| Polyethylene pipes | Easing (slow) | Same lag dynamic as PVC |
| Bitumen / waterproofing membranes | Easing (slow) | Energy-intensive; eases last |
| Foam insulation | Easing (slow) | Petrochem input; still elevated |
| Adhesives and sealants | Elevated | Price reductions not yet filtering through |
| Polypropylene fittings | Elevated | Watch Q3 2026 for movement |
Copper: Going the Other Way
While oil-linked inputs are on a slow path to relief, copper has moved in the opposite direction and shows no sign of reversing.
Copper broke US$13,000 per tonne in early 2026, representing a 16.5 per cent year-on-year surge flagged by the Altus Group in its Q4 2025 report. By early June 2026, the London Metal Exchange price had pushed to around US$13,800 per tonne, near record levels.
Goldman Sachs has since revised its year-end 2026 copper forecast upward to US$13,735 per tonne, from US$12,465 in April. UBS is more bullish still, projecting US$14,000 by September 2026 and US$15,500 per tonne by mid-2027 in its bull case.
The drivers are structural, not cyclical. BHP estimates that a single data centre now requires between 5,000 and 50,000 tonnes of copper. AI infrastructure buildout, electrification of transport and buildings, and grid expansion are all adding sustained demand that supply growth cannot match. A 30 June 2026 US refined-copper tariff review deadline adds another watch-item.
Not all analysts agree on the pace. Some, including StoneX, read copper as overextended at current levels. That counter-view is worth noting. But the structural demand case is not going away.
Where this lands on site: Electrical cabling, copper plumbing, HVAC equipment, and mechanical fitout. These trades typically work late in the build sequence, under the most compressed timelines. The Altus Group was forecasting two further price rises in electrical cable through 2026 as of Q1. Watch your subcontractor quotes on these scopes carefully.
Fuel Excise: The 1 July Pressure Point
Since 1 April 2026, the federal government has been running a halved fuel excise, cutting the standard 52.6 cents per litre to 26.3 cents per litre across petrol and diesel. The heavy vehicle road user charge was suspended for the same period.
That relief ends 30 June 2026.
From 1 July, the excise reverts to the full indexed rate. GST applies on top of the excise, so the real bowser impact is roughly 28.9 cents per litre, not just the headline 26.3-cent excise change. The national average unleaded price was sitting around $1.66 per litre in mid-June. Full reinstatement is expected to push that to around $2.00 per litre.
Diesel faces a similar rebound, with the additional reinstatement of the heavy vehicle road user charge creating compounded pressure for freight, concrete delivery, crane operations, and site vehicles.
Finance Minister Katy Gallagher confirmed the extension is under ‘active consideration,’ but Treasurer Jim Chalmers has consistently described the measure as temporary. NRMA’s expectation as of mid-June was full reinstatement. Even if an extension is granted, CPI indexation is scheduled to push the excise rate higher again on 4 August 2026 regardless.
For builders, this is not a passive cost. Every concrete truck, delivery vehicle, crane, and site ute runs on diesel. The 28.9-cent increase flows directly into subcontractor rates and materials delivery. It will arrive at exactly the moment the benefit of crude’s decline is being slow to filter through.
| THE GOOD BUILDER TAKE Oil is falling. Copper is rising. The fuel excise is snapping back. Three separate dynamics are landing on builders simultaneously, and none of them are going to resolve neatly by quarter’s end. The key discipline right now is not predicting where prices land. It is reviewing every contract, quote, and tender validity period to make sure your business is not carrying risk that belongs to the project. The builders who absorbed losses silently in 2022 because they had not reviewed their fixed-price exposure are the cautionary tale. The ones who had variation clauses in place and communicated early with clients are the ones still building. |
Other Materials: What the Altus Q1 2026 Data Shows
The Altus Group’s Q1 2026 cost data is the most useful current benchmark, with one important caveat: the data was collected before 28 February. It does not capture the conflict’s direct impact. The June quarter data, due around July, will be the first to reflect the shock in the official indices.
The Cordell Construction Cost Index printed a 1.0 per cent increase for the December 2025 quarter, the strongest quarterly result of the year, and 2.5 per cent for the full year. That was before the conflict opened. The June quarter print is the one to watch.
Key findings from Altus Q1 2026:
- Cement: imported cement up 15 per cent, local grinding up around 10 per cent, with trucking adding a further 12 to 15 per cent on energy and freight pass-through
- Structural steel and rebar: flat to slightly down this quarter, but anti-dumping measures on imported steel could push prices back up
- Plywood: 12-month imports crossed 500,000 cubic metres in January 2026, up 21.8 per cent year-on-year, with China accounting for 43.8 per cent of Australia’s $3 billion wood import bill
- Petrochemical watch: insulation, membranes, PVC conduit, sealants, adhesives all in transition
- Additional escalation risk: if conflict disruption persists, Altus sees a further 2 to 3 per cent on annual cost escalation, heaviest on mechanical, facade, and civil scopes
If You Are Building in Queensland, This Is Still the Hotspot
The Altus Group, cited by API Magazine and Broker News in early 2026, identified Brisbane as the national leader for construction cost escalation through 2027. The forecasts: 7.50 per cent cost growth in 2026, 7.75 per cent in 2027.
For context, Sydney is forecast at around 4.25 per cent and Melbourne at 3.75 per cent. Two-speed market is an understatement.
The structural drivers have not changed: the Olympics pipeline, the $9 billion Bruce Highway upgrade, and one of the most constrained housing markets in the country. Brisbane needs more than 210,800 new homes by 2046. Labour shortfalls are projected to peak above 50,000 workers in 2026 and 2027. Public sector work is bidding directly against residential subcontractor pools.
Add materials cost pressure to that equation and the case for tighter contract management in Queensland is hard to overstate.
For a broader view of how insolvency pressure fits into this picture, there were 1,894 construction insolvencies over the 12 months to early 2026, the most of any sector in Australia. Thin margins and materials volatility are a dangerous combination. Understanding your cash flow and progress claims position has never been more important.
What Builders Should Be Doing Right Now
- Review every fixed-price contract in your pipeline. Identify which scopes carry petroleum or copper exposure and have the conversation with clients before costs land.
- Shorten tender validity periods. Major Tier 1 and Tier 2 contractors moved to 15-day tender validity during the conflict. If you are still offering 60 to 90 days on petroleum-linked or copper-linked scopes, you are carrying their risk.
- Check your rise-and-fall clauses. NSW, Queensland, SA, Tasmania, ACT, and NT all have provisions in varying forms. Victoria and WA are tighter. Know what applies to your contracts.
- Get supplier notifications in writing. If prices are moving, you need a paper trail. One email confirming a price increase is evidence. A verbal conversation on site is not.
- Lock in key materials early where possible. Pre-ordering on confirmed jobs, particularly copper cable and fittings, protects your margin against further LME movement. As we explored in The Hidden Cost of an Idle Site, early procurement is not just a cost play. It is a schedule play.
- Budget for 1 July fuel costs now. Do not wait for the bill to arrive. Diesel prices for concrete, cranes, and delivery are about to rise. Subbies will pass it on.
- Communicate early with clients. Builders who flag cost risks proactively maintain trust. Those who absorb costs quietly until they cannot are the ones under pressure. This is also a practical point about
What to Watch in Q3 2026
- Cordell CCCI June quarter print (due around July): the first index data to capture the conflict’s direct materials impact
- US refined-copper tariff review: 30 June 2026 deadline; any new measures could amplify copper cost pressure
- Fuel excise indexation: scheduled for 4 August 2026 under CPI, regardless of whether the current cut is extended
- Strait of Hormuz MOU implementation: the 60-day framework is fragile; watch for compliance disputes between the US and Iran through August
- Altus Group Q2 data: will be the first comprehensive picture of how the shock has moved across the full materials basket
Watch your pipeline. Watch your materials quotes. And watch what your subbies are telling you about their own costs. If they are being squeezed, it will land on your job.
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Last updated: June 2026. Data sourced from Altus Group, ABS, Cordell CCCI, LME, ATO, Al Jazeera, CNBC, NRMA, and Fuel Daddy. Commodity prices are indicative and subject to change. Verify current rates with suppliers before pricing.
Author: TGB Editorial
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