A global crisis is choking the world's oil bottleneck and Australia's petrol pumps.
US and Israeli attacks on Iran late last month triggered retaliatory strikes on major oil facilities in the Middle East.
Iran has effectively closed the Strait of Hormuz, a critical passageway that carries 20 per cent of the world's oil supply, and plunged oil markets into chaos as fears grow about global fuel supplies. Prices have fluctuated sharply, reaching almost US$120 per barrel in recent days before easing to about $100 on Friday.
"Hormuz is not just any flashpoint," says Dr Lurion De Mello, Senior Lecturer of Applied Finance at Macquarie Business School.
"It handles roughly one fifth of global seaborne oil and LNG supply , meaning even short interruptions can send shockwaves through markets. When the United States and Israel struck Iranian targets, insurers withdrew war-risk cover and freight rates surged to historic highs."
"This combination has turned a long-imagined scenario into a real-time test of global energy security," De Mello says. "For Australia, the consequences are particularly acute."
Across regional Australia this week, drivers reported local service stations were rationing petrol. Farmers have sounded the alarm, with National Farmers' Federation president Hamish McIntyre telling The Daily Telegraph food prices could rise by as much as 50 per cent.
The International Energy Agency said on Wednesday that member countries would release a record 400 million barrels from emergency stockpiles. Federal Treasurer Jim Chalmers welcomed the decision.
Treasurer Jim Chalmers is attacking petrol giants for price gouging but ruled out cutting excise on fuel as governments pocket an extra $15 million a week in GST alone from motorists. Photo: Getty.
"The IEA coordinating the release of millions of barrels of fuel is a good development," he told ABC's News Breakfast on Thursday.
Under pressure to address reports of regional fuel shortages, Chalmers insisted Australia still had sufficient fuel available.
"I understand people are worried about this. I can assure people that we have enough fuel in total," he said.
"We are well placed as a country and as an economy to deal with the worst the world can throw at us."
Australia will ease fuel standards for 60 days so that dirtier fuel marked for export can be re-diverted into the local market to ease shortages caused by panic buying.
This will inject 100 million litres of extra petrol per month, roughly two extra days of national supply, into rural and regional areas.
"It is disturbing to note that Brisbane's Ampol refinery actually exports their fuel due to its high sulphur content," De Mello says. "It would be better for everyone if we upgraded the refinery to produce low sulphur fuels that meet emissions standards."
It comes as analysts forecast regular unleaded petrol prices could soar close to $3.50 a litre.
A board shows fuel prices at a BP gas station on Silverwater Road on March 10, 2026 in Sydney, Australia.
Australia's fuel storage remains thin and difficult to measure
"In 2019, I warned that Australia's stockpile of transport fuels was far from adequate and that basic numbers were difficult to verify," De Mello says. "Unfortunately, the issue persists in 2026."
Part of the confusion stems from how Australia reports its fuel reserves.
"The government relies on multiple stock measures that are not directly comparable . That makes it surprisingly difficult to determine how many days of usable petrol, diesel or jet fuel we actually have."
The most widely cited figure is the Minimum Stockholding Obligation (MSO), an industry-based measure of petrol, diesel and kerosene held domestically.
According to the latest government data, during 2024–25 Australia held on average:
- 39 days of petrol
- 31 days of kerosene (jet fuel)
- 33 days of diesel
"These figures do not represent days of import disruption. They represent days of consumption cover," De Mello explains.
"When the government says we have 39 days of petrol, that includes fuel already on tankers heading towards Australia."
Although the International Energy Agency requires members to hold the equivalent of 90 days of net imports, Australia still does not meet that benchmark.
"The gap between our consumption-based stocks and our international obligations highlights just how vulnerable we remain to supply shocks," De Mello says.
Shipping, not geology, is Australia's real weakness
A fuel tanker drives Stuart highway in the Australian Outback. Photo: Getty.
Over several decades, the closure of domestic refineries has left Australia heavily dependent on imported petrol, diesel and jet fuel.
In 2005, Australia had eight operating oil refineries. Today, only two remain.
The Ampol Lytton refinery in Brisbane and Viva Energy's Geelong refinery supply less than 20 per cent of Australia's liquid fuel demand.
"Australia's risk is strategic, not geological," De Mello says.
"We do not lack access to oil. We lack secure access to ships willing and able to deliver refined fuel."
Australia once maintained its own tanker fleet. Today, almost all refined fuel arrives on foreign vessels from Japan, South Korea, Singapore, Malaysia and Vietnam.
"The Morrison government's 2020 pledge to boost diesel storage has been partially delivered, but it is still insufficient," De Mello says.
"Diesel is the lifeline of Australia's economy. It powers emergency services, freight and backup electricity generation. Even renewable infrastructure such as wind turbines and Snowy Hydro systems rely on diesel as backup."
Could Australia run out of petrol?
"Not this week or this month," De Mello says.
"But the more important question is how long Australia could cope if tankers were unable to reach us for an extended period?"
The concern is not crude oil supply, but refined petrol, diesel and jet fuel shipped from refineries across the Asia-Pacific.
"With roughly a month of petrol and diesel available under normal conditions, the system functions only because imports arrive continuously," he says.
If disruptions persist, Australia would see rising wholesale and retail prices, slower replenishment of terminals, regional supply imbalances, and tightening diesel availability before the petrol pumps run dry.
"If the crisis at Hormuz continues for weeks or spreads further, genuine shortages become plausible," De Mello says.
"This is not a theoretical scenario. It is a foreseeable consequence of failing to build resilience."
What Australia must do next
De Mello believes the Iran-Hormuz crisis should serve as a turning point for Australia's fuel security planning.
"Australia needs transparent reporting of usable, onshore fuel stocks across petrol, diesel and jet fuel," he says.
"We need expanded multi-fuel storage capacity, not just diesel storage."
"We also need regional fuel security partnerships with countries such as New Zealand, Vietnam and Malaysia to build shared reserves and mutual emergency arrangements."
De Mello also calls for a national fuel emergency plan that identifies priority sectors, including agriculture, that would receive fuel allocations if imports slowed or stopped.
A board shows fuel prices at a Shell gas station on Victoria Road on March 9, 2026 in Sydney.
Finally, he argues Australia must strengthen supply chain resilience by rebuilding refining capacity or securing guaranteed regional refining access.
"Australia will not run out of petrol tomorrow," he says.
"But in a world where a single conflict can immobilise a fifth of global oil trade overnight, relying on luck is not a strategy."
Stockpiling crude oil alone would not solve the problem, he adds.
"In an emergency it could take 30 to 40 days to ship crude to Singapore for refining and then transport the fuel back to Australia. The long-term solution is to refine here."
The Hormuz conflict has demonstrated how quickly the global energy system can seize. The larger question is whether Australia learns from this moment, or waits for the next crisis to have the conversation again.
