Here is a question worth sitting with: when the United States and Israel struck Tehran on 28 February 2026 and killed Supreme Leader Ali Khamenei, what did they also strike? The answer, whether intended or not, was the globally integrated energy system on which every Australian motorist, manufacturer, and household ultimately depends.
The military operation, known as Operation Epic Fury, set off a chain of consequences that markets began pricing in before the smoke had cleared. Global benchmark Brent crude jumped more than 8.5%, or $6.40, to $79.20 a barrel following US and Israeli strikes on Iran that killed Supreme Leader Ali Khamenei. Even before the weekend's escalation, oil prices had risen 17% this year off President Donald Trump's ramped-up rhetoric against the Iranian regime. That trajectory now looks like a gentle prelude.
Within hours of the strikes, the Islamic Revolutionary Guard Corps transmitted warnings via VHF radio to vessels in the strait, stating that no ships would be permitted to pass. Although Iran did not formally declare a blockade, the threats led to an effective closure, with ship-tracking data showing a 70% reduction in traffic. The distinction between a de jure and a de facto blockade matters little to insurers. Insurance premiums had already reached six-year highs ahead of the strikes. The result was a de facto closure for most of the global shipping community, comparable in character to the Red Sea disruption but with far larger volumes at stake.
According to the US Energy Information Administration, about 20 million barrels of oil, worth about $500 billion in annual global energy trade, transited through the Strait of Hormuz each day in 2024. The Strait is not merely an oil route. Approximately 22 percent of global LNG trade, primarily exports from Qatar and the UAE, transits the Strait of Hormuz. Unlike oil markets, no coordinated strategic reserve system exists for natural gas. If LNG shipments are disrupted, there is no comparable emergency release mechanism capable of stabilising supply.
The war has also opened a second front that is less visible but no less consequential. Doug Madory, director of internet analysis at Kentik, said that internet connectivity dropped to near-zero levels soon after airstrikes hit the country on Saturday morning. Networking giant Cloudflare also confirmed the collapse of Iran's internet on Saturday. A popular religious calendar app with over five million downloads, BadeSaba Calendar, had also been compromised, displaying alerts urging the armed forces to "give up weapons and join the people." The conflict's digital dimension reached beyond Iran's borders: Amazon said it was experiencing an outage at its Middle East data centre in the United Arab Emirates, soon after Iranian missiles hit the coastal country, with the outage caused by "objects that struck the data center, creating sparks and fire."
Cybersecurity firm CrowdStrike has sounded alarms that are directly relevant to Australian critical infrastructure operators. Adam Meyers, head of counter adversary operations at CrowdStrike, said the firm was "already seeing activity consistent with Iranian-aligned threat actors and hacktivist groups conducting reconnaissance and initiating denial-of-service attacks." "These behaviors often precede more aggressive operations," Meyers said, adding that in past conflicts Tehran's cyber actors had targeted energy, critical infrastructure, finance, telecommunications, and healthcare.
The counter-argument deserves serious consideration: the world is not entirely defenceless against this shock. Eight countries that are part of the OPEC+ oil cartel announced on Sunday that they would boost production, increasing output by 206,000 barrels per day in April, more than analysts had been expecting. The countries boosting output include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman. The production increase may somewhat blunt the expected surge in oil prices, but energy analysts did not expect the production increases to do much to keep prices in check. There is a structural reason for that scepticism: OPEC Plus retains approximately 3.5 million barrels per day of spare capacity, concentrated in Saudi Arabia and the UAE. However, a significant portion of this capacity cannot reach global markets if the Strait remains inaccessible. Alternative pipeline routes exist but cannot fully offset a Strait closure.
For Australia, the picture is genuinely layered. As one of the world's largest LNG exporters, a sustained disruption to Middle Eastern gas supply creates a commercial windfall for producers operating out of the Pilbara and the Browse Basin. Oxford Institute for Energy Studies analysis confirms that Australia is especially well placed to supply more LNG and partly offset the decline from the Middle East if the Strait of Hormuz remains disrupted. That is good news for the balance of trade and for Commonwealth revenue. It is less good news for the households and businesses who buy petrol, diesel, and imported goods priced in a world of $80-plus crude.
Hamad Hussain, a climate and commodities economist at Capital Economics, warned that a sustained rise in oil prices would add upward pressure to global inflation. "If crude oil prices were to rise to $100 per barrel and remain at those levels for a while, that could add 0.6 to 0.7 percent to global inflation," he said, noting that this would also drive up natural gas prices. For the Reserve Bank of Australia, already threading a needle between residual inflation and slowing growth, an exogenous energy shock of this magnitude is precisely the kind of complication that forecloses easy choices.
Strip away the talking points and what remains is this: the decisions taken in Washington over the coming days will determine whether the current spike is a brief, correctable premium or the opening phase of a sustained energy crisis. Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt as US President Donald Trump suggested that attacks would continue until US objectives were met. Analysts have cautioned that oil prices have been highly reactive to geopolitical tensions in recent weeks, and prices could spike to well over $100 per barrel if there is a major disruption.
History will judge this moment by whether it prompts a genuine reckoning with energy security vulnerability, or simply produces the usual cycle of shock, adaptation, and amnesia. Australia is not a passive spectator. It has strategic interests in the free passage of energy through the Indo-Pacific, treaty obligations through AUKUS, and an economy exposed on both sides of this ledger. The Albanese government will need to be clear-eyed about all three dimensions, not just the diplomatic talking points. Reasonable people can disagree about whether this military operation was wise or necessary. What is not in dispute is that the consequences now extend well beyond the Persian Gulf, and Australians will feel them at the bowser before any political consensus forms about what comes next.