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Emergency services said the diesel had been spilled by a vehicle on Saturday morning, and some cars later could not climb the hill because of the slippery conditions.
Firefighters washed the street with fire hoses and also used a detergent-related product to disperse the diesel.
The street was closed from 9.50am to about 10.40am, emergency services said.
A police car was used to block the street near the Arthur St intersection, and cones blocked off part of the lower block.
A police spokesman said the Dunedin City Council had been notified of the spill and police left the street about 10.40am.