Further escalation of the conflict in Ukraine could see petrol prices at the bowser soar beyond $2.50 a litre.
Experts warn the fuel price escalation is set to continue, but warned calls to scrap the excise tax would be a "Band-Aid" solution to a problem impacting global oil supplies.
On Monday, Prime Minister Scott Morrison played down speculations the Commonwealth would cut taxes imposed on petrol, despite a number of Nationals calling for the excise to be cut at the upcoming federal budget on March 29.
"These costs of living impacts are real, and the Australian government understands that," he said.
"[But] the budget is in a couple of weeks, and that's when announcements are made about matters in relation to the budget. I don't intend to engage in pre-budget speculation on this matter."
CommSec chief economist Craig James said prices could rise above $2.50 if the war escalates and is pushed out for longer.
He also noted in recent days, east coast capital cities were at the peak of the discounting cycle which had also influenced the price inflation.
"It is basically a Band-Aid type solution," Mr James said in regards to cutting fuel excise tax.
"The major driver, of course, is the global prices and any benefit from cutting the fuel excise would be gobbled up if oil prices continue to march their way higher."
The wholesale terminal petrol price on Monday reached 198.2 cents a litre, which is a 19.4 per cent jump compared to the prior week.
Pushes for dropping the excise tax have come as the New Zealand government slashed its excise duty on fuel by 25 cents, also halving the price of public transport tickets.
Australian Competition and Consumer Commission Chair Rod Sims flagged the cost of petrol is largely out of Australia's control and claimed OPEC withholding supply was adding to the price pressures.
He said Australia's current 44.2 cents fuel excise tax is the fourth-lowest in the world and was the main pool of funds to pay for road repair and maintenance.
"The OPEC cartel led by Saudi Arabia has been withholding supply and that's forced prices up a fair bit. But the last few weeks, the massive hikes have been due to the dreadful invasion of Ukraine," Mr Sims said.
"This is an international issue, and it is affecting petrol prices all around the world. I think this is completely outside the control of anyone in Australia."
Mr Sims believes a drop in the fuel excise would result in government needing to source road maintenance funds from other taxation sources.
Independent senator Rex Patrick, who is also in favour of cutting excise tax, conceded it would impact the budget's bottom line.
Mr James from CommSec highlighted the rise in fuel should be used as an opportunity to incentivise a switch to electric vehicles and other fuel sources.
"The long-term aim is to encourage people to go in to more fuel efficient cars ... and electric vehicles," he said.
The invasion has exposed the European Union's dependence on Russian oil, which accounts for roughly 40 per cent of the bloc's energy needs.
Mr Morrison flagged Australia's emerging hydrogen industry would be well placed to capitalise on Europe's transitioning energy needs.
Mr Morrison said "one of the first things raised" by German Chancellor Olaf Scholz during recent talks was Australian hydrogen production.
"Major advanced economies in the world today are considering again what their supply chains are ... that is only heightened by the uncertainty we've seen," he said.
"They know that they need to change where they're getting their energy from in Europe, and Australia has great opportunities for that."
Labor leader Anthony Albanese said cost of living pressures, including climbing petrol prices, predated the Ukraine invasion, with "everything going up except people's wages".
However, Mr Albanese would not be drawn on whether the opposition would support cutting the fuel excise.
"They haven't done anything about petrol. We'll await to see what they do with regard to petrol," he said.