Australians will not see a whole country running out of petrol anytime soon, but the war in Iran has significantly increased the chances of patchy shortages, increased bowser prices and a fuel system that relies on imports.
Threat is not that pumps will suddenly run out of fuel. The threat is that a shock will hit Australia’s long supply chain before fuel can be moved to where it is most needed
The immediate problem lies in the Strait of Hormuz. The International Energy Agency said that oil and fuel passing through this waterway had reduced to less than 10% of pre conflict levels since the Middle East war began on 28 February.
This is because 20 million barrels a day that used to pass through this waterway are now being disrupted.
Australia is vulnerable because it participates in that global market instead of separating itself from it.
According to official energy data, imports accounted for 79% of Australia’s refined product consumption in 2023 and 2024, the highest percentage ever.
Despite the gradual growth of alternative fuels and electric vehicles, the nation still depends on liquid fuels for more than half of its final energy needs.
However, Canberra has sought to ease the situation. On 13 March, the government announced that it would release petrol and diesel from domestic stockpiles, temporarily relax the baseline stockholding levels and relax the fuel quality requirements for 60 days.
Reuters reported that this could free 5 million barrels of fuel and unlock another 100 million liters a month.
On 3 March, the energy minister, Chris Bowen announced that Australia had 36 days of petrol, 34 days of diesel and 32 days of jet fuel.
These levels were well below the 90 day level that the IEA uses as a benchmark.
Thus, the answer to the question “will the pumps run dry?” is no, at least not yet.
However, dry spells may be a reality at the local level, particularly in rural Australia. In any event, the shock is already here.
Government policy is based on the imperative of preserving that capacity and holding more fuel on shore. The Iran war has not caused the fuel vulnerability. It has uncovered it.
