Prime Minister Anthony Albanese has defended the federal government's decision to extend fuel price relief for Australian motorists, announcing that the fuel excise reduction will continue through July at a reduced rate.

Under the proposal, drivers will receive a discount of 16 cents per litre during July, compared with the 32 cents per litre reduction that has been in place since April.The extension is expected to cost approximately $400 million.Albanese described the gradual reduction of the subsidy as a sensible approach that balances support for households with budget considerations.

He argued that many Australian families remain under financial pressure and that instability in the Middle East could continue to affect global energy markets and fuel prices for some time.Although oil prices have eased recently, he noted that lower wholesale costs typically take time to be reflected at petrol stations.

The Prime Minister said he would seek support from state and territory leaders at the upcoming National Cabinet meeting, expecting them to continue foregoing additional GST revenue associated with higher fuel prices in order to help fund the measure.

The policy announcement comes amid uncertainty surrounding a recently signed memorandum of understanding between the United States and Iran intended to reduce hostilities.Tensions remain high after Iran accused the US of failing to stop Israeli attacks on Lebanon.Opposition figures broadly welcomed the continuation of fuel relief.Coalition foreign affairs spokesman Ted O’Brien supported the government's cautious approach while discussing broader regional security concerns.Opposition Leader Angus Taylor said the Coalition had long supported fuel excise reductions and would review the details of the extension.

Former Nationals leader David Littleproud also welcomed the measure but argued motorists continued to face significant cost pressures due to ongoing geopolitical instability.