Strait of Hormuz Crisis: How It Affects Australian Fuel

What's happening at the Strait of Hormuz?

The Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Persian Gulf to the open ocean. Around 20% of the world's oil supply passes through it daily. In March 2026, Iran imposed a de facto blockade in response to US-Israeli military strikes, restricting vessel transits from roughly 138 per day to fewer than 12.

Iran is running a selective, permission-based transit system that favours allied nations like China, India, and Russia. For everyone else, the strait is effectively closed. This has removed an estimated 16 to 20 million barrels per day from global markets, making it the most significant oil supply disruption since the 1970s.

Why Australia is particularly exposed

Australia is one of the world's largest energy exporters (coal, LNG) but imports roughly 90% of the refined petrol, diesel, and jet fuel it actually puts in vehicles. The country consumes around 400 million barrels of oil equivalent per year but produces only about 40 million barrels domestically. Making matters worse, Australian crude oil is of a grade unsuitable for producing petrol and diesel.

Most of Australia's fuel comes from Asian refineries in Singapore, South Korea, and Japan rather than directly from the Middle East. But those refineries depend heavily on Middle Eastern crude. This creates a two-step vulnerability: Australian ships aren't transiting the strait, but the refineries that supply Australia are struggling to source crude to refine.

South Korea, which supplies about a quarter of Australia's diesel imports (around 120,000 barrels per day), has capped refined product exports at 2025 monthly averages. China has restricted jet fuel exports. At least six fuel shipments to Australia have already been cancelled or deferred, with more expected.

Australia's refinery problem

Australia had eight oil refineries in 2000. Six have since closed. The remaining two (Ampol in Brisbane and Viva Energy in Geelong) are both subsidised by taxpayers because it is cheaper to refine oil in Asia and ship the finished product to Australia.

This leaves Australia with minimal ability to turn crude oil into usable fuel domestically. Even if the country could source crude from non-Middle Eastern producers like the US, Canada, or Argentina, it lacks the refinery capacity to process it at scale. The government is investigating building more refineries, but this would cost hundreds of millions and take years to deliver.

How much fuel does Australia have in reserve?

As of early April, Energy Minister Chris Bowen reported that Australia holds:

These stocks fall far short of the International Energy Agency's requirement for member countries to hold 90 days of net imports. For comparison: Japan holds up to 250 days, the UK stores 51 days, and the US holds around 400 million barrels (115+ days). The government has said it would cost $20 billion over four years to build the infrastructure needed for 90-day compliance.

Federal government modelling indicates that fuel rationing would be triggered when diesel stockpiles fall to 10 days of supply. The government says it has "secured legally binding supply well into May" and is seeking agreements with Asian nations to preserve fuel supply contracts.

Impact on prices at the pump

Brent crude surged past US$111 per barrel in early April, up more than 50% since the war began. WTI futures jumped over 11% in a single day.

In response, the federal and state governments announced a combined 32 cents per litre cut to fuel excise. On the first day retailers passed on the savings, average prices dropped by more than 20 cents per litre. The government has also offered financial support for private companies to boost fuel imports. However, the underlying global price pressure remains.

Outages and shortages on the ground

Hundreds of service stations across Australia have run empty. Diesel and premium diesel have been hit hardest, accounting for the largest share of current fuel outages. This is driven by commercial and fleet demand: trucks, farming equipment, and construction machinery all depend on diesel, and businesses can't simply stop operating.

Independent and regional stations are affected first, as they have less purchasing power and smaller storage capacity than major chains. Regular unleaded (U91) remains more available, though prices are elevated.

Check the live outage tracker for current fuel availability across all states and fuel types.

How long will this last?

The last seaborne shipments from the Middle East that made it through the strait before Iran closed the channel have now delivered their fuel to Asian refineries. Those refineries have roughly a month's worth of exports in their inventories and are trying to fill shortfalls with imports from the US, Canada, Mexico, and Argentina.

Even if the Strait of Hormuz reopened tomorrow, price recovery would not be immediate. Damaged Middle Eastern refinery infrastructure requires years to repair, with a best-case scenario involving four to eight weeks of capacity restarts followed by a multi-year effort to refill emergency stocks. Experts warn it could be some time before Australians see pre-war unleaded prices below $1.80 again.

The government says about 80% of global oil supply has not been disrupted, and as one of the wealthiest fuel-importing nations, Australia is well-placed to outbid other countries competing for remaining stocks. But the fundamental supply constraint is global, and price relief depends on geopolitical developments no single country controls.

What drivers can do right now

• Check before you drive. Use the Check Petrol map to find stations with fuel and compare prices before making a trip.
• Don't panic buy. Topping up when you're at half a tank is fine. Filling multiple jerry cans creates artificial shortages and makes the problem worse for everyone.
• Time the price cycle. Petrol prices in major cities still follow regular cycles. Buying at the bottom of the cycle can save 10-30 cents per litre even during a crisis.
• Report outages. If you find a station that's run dry, report it on Check Petrol to help other drivers avoid a wasted trip.

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