Good news might finally be coming for Australian motorists — just as the government's petrol discount runs out.

Australia's regional oil price has tumbled 12 per cent in a week, hitting a three-month low. Tapis crude, the key Asia-Pacific benchmark, fell to $US84 ($119) a barrel. That's its lowest since the second week of March.

The reason? Hopes are building for a preliminary peace deal between the US and Iran. Markets are betting an interim agreement will reopen the Strait of Hormuz — a narrow waterway off Iran's southern coast that normally carries up to 20 per cent of the world's oil supply. It's been effectively blocked since the Iran war began on February 28.

If the strait reopens and stays open, the effects could reach Australian petrol pumps within seven to 10 days. That's because the price falls have already flowed through to regional benchmarks for refined products. Mogas 95, the main petrol benchmark, dropped 12 per cent last week. Diesel benchmark Gasoil fell even harder — down 17 per cent.

This timing matters. The federal government's 32¢-a-litre fuel-excise discount ends on June 30. Without any relief, prices would jump overnight. But if the oil price keeps falling, it could cushion some of that blow.

"If the strait reopens and stays open, we're hoping that these expected further falls will cushion some of the impact of the excise being restored," said Peter Khoury, a spokesman for the National Roads and Motorists Association. "We won't get back to where prices were before the war, but hopefully in the next two weeks the trends will continue, and we'll see falls at the bowser."

The Albanese government introduced the 32¢ discount in April after prices soared past $2.50 a litre for regular unleaded and $3 for diesel. The discount was made up of a halving of the fuel excise — about 26¢ — plus 6¢ of GST. It's cost the government $2.55 billion in forgone revenue.

Treasurer Jim Chalmers and Energy Minister Chris Bowen have said the discount will end this month. But Prime Minister Anthony Albanese on Tuesday declined to confirm the plan. There's a risk that announcing a firm end date could trigger panic-buying as motorists rush to fill up.

"We'll give consideration to those matters. The peace deal in the Middle East, we welcome … but the signing of the agreement will take place in Switzerland on Friday," Albanese said. "We want to see this hold."

US President Donald Trump has insisted the waterway would be clear again on Friday. "We have a lot of lanes right now already," he said.

A credible reopening of the strait would be one of the most important developments for the global economy at this juncture, said Claudio Galimberti, chief economist at research firm Rystad Energy. "Every barrel previously constrained through the strait represents inflationary pressure that would begin to unwind, at least at the margin."

But analysts are cautious. Key details of the interim deal remain unresolved. "Markets have seen this playbook before, with an initial rally on the headline followed by a fade as implementation risk re-emerges, and there is little to suggest that pattern has been broken," Galimberti said.

There are also deeper concerns. The months-long conflict has caused severe damage to global energy supplies and shipping. Even if the strait reopened immediately, oil and fuel prices are expected to stay above pre-war levels for some time. Energy companies need to repair damaged oil assets, restart shut-in production wells, obtain shipping insurance for a recent war zone, arrange possible maritime fees to Iran, and replenish global fuel stockpiles that were drawn down during the crisis.

Some shipowners have indicated they won't resume transit through the strait for weeks until they're confident the deal is "material".

"While we anticipate an increase in traffic as ships look to exit after 100-plus days on the water in the Gulf, we think it'll take months to reach anything close to February 27 levels," said Helima Croft, an energy analyst at RBC Capital Markets.

For now, the trend is heading in the right direction. If the peace deal sticks, motorists might see some relief at the bowser before the excise discount ends. If it doesn't, prices could stay high for a while yet.