From Dubai: Iran's new supreme leader Mojtaba Khamenei has signalled that the de facto blockade of the Strait of Hormuz will persist. In his first statement since taking power, read by state television on Thursday, Khamenei declared that the "lever of blocking the Strait of Hormuz must continue to be used" as economic pressure against the United States and Israel. For Australia, this development carries immediate consequences.
The statement, released through state media rather than a direct public appearance, marks a crucial moment in the regional conflict. Khamenei has not been seen in public since the war began on 28 February, prompting international speculation about his health. An Iranian official said Wednesday that the new supreme leader was injured in the attack, but "alive and well," though he has not been seen since the war began. What matters more than his visibility, however, is the message his words convey: Iran intends to wage a prolonged economic war through control of the world's most critical energy chokepoint.
The narrow channel between Iran and Oman normally carries around one fifth of global oil and gas supply, making it one of the most important energy chokepoints in the world. With the waterway effectively closed to commercial shipping, the price of Brent crude oil, the international standard, rose another 9% to more than $100 a barrel, up some 38% over what it cost when the war started. The consequences are rippling outward from the Persian Gulf far faster than analysts anticipated.
Australia's exposure to this crisis is substantial and direct. Australia exports vast quantities of energy but remains structurally dependent on imported liquid fuels. More than 90 percent of refined petroleum products consumed domestically are imported, largely from Asian refineries that themselves rely heavily on Middle Eastern crude. This dependency is not theoretical. In Australia, analysts say petrol prices could jump by around 40c a litre, meaning the cost of filling the tank would rise by about $24 for a 60-litre tank. Those increases are likely to appear at domestic petrol pumps within weeks.
Beyond petrol, the blockade threatens broader supply chains. A lesser-known dependency is that one-third of the world's fertiliser trade passes through the strait. Food production in major agricultural regions depends on those flows. New Orleans fertilizer hub urea prices have already risen from $475/metric ton to $680/metric ton. "Not great timing for the planting window in the Midwest for soy and corn," said Darrell Fletcher, managing director of commodities at Ohio-based Bannockburn Global Forex, a foreign exchange and risk management firm. If those shipments are blocked during the spring planting season, it could wreak havoc on food inflation. Food price pressures will eventually reach Australian supermarket shelves.
For Australia's strategic position, the blockade raises uncomfortable questions about fuel security and defence readiness. These Indonesian straits (Malacca, Lombok and Sunda) carry the majority of Australia's trade, with roughly 83 percent of maritime imports and around 90 percent of exports moving through these routes. The vulnerability does not end at Hormuz. Even if alternative sources of crude oil are found, the refined fuel Australia depends upon must still transit Southeast Asian shipping lanes, creating a layered exposure to disruption.
The government has strengthened strategic reserves. At the start of 2026, Australia has an estimated 36 days of petrol, 34 days of diesel and 32 days of jet fuel. This is the largest stockpile Australia has had in 15 years, but it still may not be enough. Yet Australia's current emergency strategic fuel reserve is "non-compliant", and has been since 2012.
What makes Khamenei's statement significant is not just the defiance, but the calculation behind it. Khamenei added that Iranian officials were studying the possibility of expanding the war into additional fronts where adversaries were vulnerable. "Studies have been conducted regarding the opening of other fronts in which the enemy has little experience and is highly vulnerable," he said. "Activating them will take place if the state of war continues and if it serves our interests." This language suggests Iran intends to wage a protracted conflict, not seek a swift resolution.
The international response has been measured but urgent. The growing disruption has pushed the International Energy Agency and major consuming nations to take the extraordinary step of releasing 400 million barrels from strategic reserves, the largest such intervention in the agency's history. IEA Executive Director Fatih Birol said the decision had already had a "strong impact" on markets and was aimed at stabilizing supply after the war triggered one of the biggest oil disruptions on record. The agency estimates global supply could fall by 8 million barrels per day in March as production across the Middle East is curtailed and shipping through Hormuz slows to a fraction of normal levels. Even this historically unprecedented intervention in oil markets will provide only partial relief.
The regional dynamics at play are more complex than headlines suggest. Iranian society remains divided over Mojtaba Khamenei's appointment despite his call for unity, mainly due to the same economic hardships that fuelled violent protests in December and January. Middle East analyst Zeidon Alkinani said focusing on armed resistance allowed the supreme leader to avoid "discussions over economic reform, state building and many other fundamental issues that matter to ordinary Iranians." Khamenei's hardline position may reflect not strength but political necessity within Iran itself.
For Australia, this convergence of factors creates a genuine policy challenge. Higher fuel costs will ripple through household budgets and corporate supply chains. The blockade will persist as long as the conflict does. No amount of emergency reserve releases can fully offset a prolonged closure of Hormuz. The question for Australian policymakers is not whether to respond to higher energy costs, but how to build sustainable resilience without creating new economic distortions. That conversation has only begun.