From Singapore: When the Islamic Revolutionary Guard Corps announced that no vessel was permitted to pass the Strait of Hormuz, the message reached energy trading desks across Asia before most of the region had finished breakfast. The practical consequences arrived just as quickly. As of Sunday, 150 freight ships, including many oil tankers, were stalled behind the strait, and the ripple effects were already travelling south toward Australian fuel bowsers.
On 28 February 2026, Israel and the United States launched a joint attack on various sites in Iran, in an operation codenamed Roaring Lion by Israel and Operation Epic Fury by the United States Department of Defense. The strikes targeted key officials, military commanders, and facilities, including Supreme Leader Ali Khamenei, who was killed in the attacks. The strikes came despite what had appeared, just a day earlier, to be diplomatic progress: on 27 February, Oman's Foreign Minister Badr Al-Busaidi said a "breakthrough" had been reached, with Iran agreeing never to stockpile enriched uranium and to full verification by the IAEA. Al-Busaidi said peace was "within reach".
In retaliation, Iran launched dozens of drones and ballistic missiles throughout the Persian Gulf, targeting Israel and US military bases in Jordan, Kuwait, Bahrain, Qatar, Iraq, Saudi Arabia, and the UAE. Iran also reportedly launched strikes on civilian aviation facilities, including international airports in Kuwait and the UAE. US-Israeli strikes continued into a second day, with three US service members killed and five seriously wounded, marking the first American casualties since the start of Operation Epic Fury.
The chokepoint that runs the world's energy system
The Strait of Hormuz has long sat at the intersection of geopolitical calculation and economic vulnerability. It is located between Oman and the UAE on one side and Iran on the other, linking the Arabian Gulf with the Gulf of Oman and the Arabian Sea beyond. It is just 33 kilometres wide at its narrowest point, with shipping lanes only three kilometres wide in either direction, yet it accommodates the world's largest crude carriers.
The numbers define the stakes with brutal clarity. According to the US Energy Information Administration, about 20 million barrels of oil, worth approximately $500 billion in annual global energy trade, transited the Strait of Hormuz each day in 2024. In the same year, about 20 per cent of global LNG trade transited the strait, primarily from Qatar. For Australian exporters and importers alike, the signal is stark: this is not a distant conflict.
The trade implications for Australia are direct, if not immediately obvious. Only about 15 per cent of Australia's crude oil and 5 per cent of petroleum products are imported directly from Middle Eastern countries. However, 30 per cent of Australia's refined oil effectively transits through the Strait of Hormuz because Australia sources refined fuel from South Korea and Singapore, and those refineries run on Gulf crude. If Australia's key suppliers are affected by the closure, there could be devastating flow-on effects for the country's oil supply.
Asian economies in the direct line of fire
The EIA estimated that in 2024, 84 per cent of crude oil and condensate shipments transiting the strait headed to Asian markets, and a similar pattern appeared in the gas trade, with 83 per cent of LNG volumes destined for Asian destinations. China, India, Japan and South Korea accounted for a combined 69 per cent of all crude oil flows through the strait last year, with their factories, transport networks and power grids depending on uninterrupted Gulf energy. China, the destination for more than a third of all Hormuz crude, has the most to lose from any sustained disruption.
The scenario analysts fear most is not a brief military confrontation but a prolonged closure. "A prolonged closure of the Strait of Hormuz is a guaranteed global recession," Robert McNally, an energy analyst cited by CNBC, said bluntly. Oil prices could spike above $100 per barrel if Iran attempts to make the strait unsafe for commercial traffic, analysts warned, noting that Tehran holds large stockpiles of mines and short-range missiles that could seriously disrupt traffic in the waterway. Global investment banks including JP Morgan have estimated the impact of a full Hormuz blockade at pushing international oil prices beyond $120 to $130 per barrel.
German shipping group Hapag-Lloyd suspended all vessel transit through the strait until further notice on Sunday, according to Reuters. On 28 February, nine LNG carriers simultaneously changed course away from the Strait of Hormuz within a 6.5-hour window, demonstrating coordinated decision-making among major shipping operators. Brent crude prices had already reached $73 per barrel in late February 2026, the highest since July 2025, partly reflecting geopolitical risk premiums.
Canberra backs the strikes, eyes the consequences
Australia's political response was rapid and unambiguous. The Australian government backed United States military action against Iran and warned of "reprisal attacks and further escalation" in the Middle East. Prime Minister Anthony Albanese, Defence Minister Richard Marles and Foreign Minister Penny Wong said in a joint statement that Australia "stands with the brave people of Iran", while declaring support for US action to prevent Iran from obtaining a nuclear weapon.
Albanese described the Iranian regime as a destabilising force "through its ballistic missile and nuclear programs, support for armed proxies, and brutal acts of violence and intimidation", and pointed to Iran having directed at least two attacks on Australian soil in 2024, targeting the Jewish community. In response, Australia had already taken the unprecedented steps of expelling Iran's ambassador, suspending its Tehran embassy, and listing the IRGC as a state sponsor of terrorism.
The Department of Foreign Affairs and Trade updated the Smartraveller portal to its highest alert level, issuing "Do Not Travel" warnings for Iran and Iraq, and "Reconsider Your Need to Travel" advisories for the wider Gulf region, including the UAE, Qatar, and Jordan. Foreign Minister Wong said more than 4,000 Australians had registered for help to leave the Middle East, around 2,900 in Iran and 1,300 in Israel, with Australian officials deployed to Iran's border with Azerbaijan to assist those who were able to cross.
Albanese's support for the strikes, while consistent with Australia's alliance obligations, sits in some tension with his government's parallel calls for de-escalation. "We don't want escalation and a full-scale war. We continue to call for dialogue and for diplomacy," Albanese said, calling on Iran to "come to the table and abandon any nuclear weapons program". That dual message reflects a genuine diplomatic bind: backing an ally's military action while simultaneously urging restraint is a delicate position to hold as the region burns.
The case for complexity
Critics of the military strikes, including the United Nations Secretary-General António Guterres, argued the use of force undermined international peace and security. China called for an immediate halt and said Iran's sovereignty should be respected. European leaders, while not participating in the strikes, condemned Iran's retaliatory attacks and called for a resumption of negotiations.
There are also pointed questions about timing. Just a day before the strikes, Oman's foreign minister had declared that Iran had agreed to never stockpile enriched uranium and to full IAEA verification. Whether the diplomatic opening could have held is now unanswerable, but the question will shadow the decisions made in Washington and Jerusalem for years.
The case for the strikes rests on a different kind of calculation: that Iran's nuclear programme had reached a point where words and sanctions had demonstrably failed, and that a regime willing to orchestrate attacks on Australian soil, massacre its own protesters, and proxy-fund militant groups across the region had forfeited the benefit of the doubt. Beginning in late December 2025, massive nationwide anti-government protests had erupted in Iran, driven largely by economic crisis, the collapse of the rial, and rising prices, spreading to over 100 cities across the country in the largest unrest since the 1979 revolution.
For Australia, the honest reckoning goes beyond alliance politics. The country imports more than 90 per cent of its liquid fuel, maintains strategic reserves far below the International Energy Agency's recommended 90-day buffer, and has allowed its domestic refining capacity to collapse to near zero. A Hormuz disruption lasting weeks, let alone months, would test supply chains that have never been stress-tested at this scale. Oxford Institute for Energy Studies analysis found that in a closure scenario, Australia, as a major LNG exporter, could supply more to partly offset the decline from the Middle East, which is cold comfort if Australians cannot afford to fill their tanks in the meantime.
The conflict now unfolding in the Persian Gulf is simultaneously a security crisis, an energy shock, and a test of whether the rules-based international order can be rebuilt after it has so clearly frayed. Reasonable people can disagree about the wisdom of the strikes, the adequacy of the diplomatic effort, and the proportionality of Iran's retaliation. What is harder to dispute is that the Department of Foreign Affairs and Trade was right to warn that things could get considerably worse before they get better. Australia's energy security, and the cost of living pressures that would follow a sustained oil shock, depend heavily on decisions being made in capitals thousands of kilometres away. That is a vulnerability no foreign policy statement, however well-worded, can fully paper over.