Iran has effectively closed the Strait of Hormuz, a critical passageway that carries 20 per cent of the world's oil supply. What began as a Middle East conflict in late February has become an immediate threat to Australian food security and the rural livelihoods that depend on consistent fuel access.
Petrol prices have jumped 50 cents a litre from $1.69 to $2.19 on average across Australia since the start of the US-Iran war. But for farmers and regional communities, the crisis runs deeper than price. According to SBS News reporting, Nathan Falvo was forced to ration the latest fuel delivery at his petrol station in Robinvale, in Victoria's far northwest, after running completely dry over the weekend; Falvo said the shortage had spread to the town's two other stations, which have also introduced a $50 sales limit.
The government faces mounting criticism not over its response to this particular crisis, but for years of inaction on fuel security. Australia currently holds 36 days of petrol supply, 29 days of jet fuel, and 32 days of diesel. Australia's current emergency strategic fuel reserve is "non-compliant", and has been since 2012. Australia continues to lag far behind the International Energy Agency requirement that member nations maintain at least 90 days of fuel stocks; the country has missed that benchmark for more than a decade.
This structural weakness matters because Australia imports roughly 90 per cent of its liquid fuel (refined petrol and diesel). In 2005, Australia had eight operating oil refineries; today, only two remain; the Ampol Lytton refinery in Brisbane and Viva Energy's Geelong refinery supply less than 20 per cent of Australia's liquid fuel demand. All refined fuel arrives on foreign vessels from Japan, South Korea, Singapore, Malaysia and Vietnam.
Agricultural emergency
The crisis has hit farming hardest. NSW Farmers President Xavier Martin said "Right now, we've got farmers across the country who have run out, or are running out of fuel, while others are only a week or two away from empty." He noted that "Normally they're refilled by bulk suppliers, many of them smaller independent distributors in rural and regional areas; those suppliers are telling our members they're dry as well, with no more fuel coming".
WA Shadow Minister for Agriculture and Food Lachlan Hunter raised serious concerns about a growing diesel shortage that is already forcing some Western Australian farming operations to stop work; farmers across regional WA were reporting that diesel deliveries had been halted, with some told supply may not resume for up to six weeks.
For a vine grower in Queensland's Granite Belt, the search for fuel has become personal. Robert Fenwick, owner of Heritage Estate Wines, had to call his fuel supplier and was told "we're way down a long list of people they might potentially sell some fuel to"; he drove around the countryside and picked up 600 litres of fuel at enormous expense, noting the price had risen 30 to 50 cents in days.
Government response and criticism
Australia's Energy Minister Chris Bowen says rural and regional areas are facing "real and unacceptable shortages" of fuel. In response, the government eased fuel standards for 60 days so that dirtier fuel marked for export can be re-diverted into the local market; this will inject 100 million litres of extra petrol per month, roughly two extra days of national supply, into rural and regional areas. The government also announced up to 762 million litres of petrol and diesel from companies' emergency reserves could be released to address shortfalls.
However, critics argue the measures are insufficient. The government has moved to boost domestic petrol availability by stocking regional service stations with dirtier fuel, but the measures will not immediately assist farmers; the additional volumes will be restricted to only petrol and will unlikely assist the vast majority of farmers whose agricultural machinery runs on diesel.
The government has said that the current fuel situation is a "national crisis". Yet the underlying vulnerability is not new. A financial expert warned in 2019 that Australia's stockpile of transport fuels was far from adequate; over several decades, the closure of domestic refineries has left Australia heavily dependent on imported petrol, diesel and jet fuel.
Strategic choices ahead
The Iran conflict has become a test case for Australia's energy security planning. Australia's fuel vulnerability is often discussed in terms of global supply, but geography suggests a more uncomfortable reality; even if Middle Eastern crude can eventually be rerouted, the refined fuel Australia imports must still pass through narrow maritime channels of Southeast Asia before reaching Australian ports; these Indonesian straits carry roughly 83 per cent of maritime imports and around 90 per cent of exports.
Some voices call for immediate action on fuel independence. In letters to the Sydney Morning Herald, readers pointed to emerging alternatives. One writer noted that 103,269 buyers of electric vehicles in Australia last year must be happy with their decision, while another observed that analysts forecast regular unleaded petrol prices could soar close to $3.50 a litre. Yet rural communities have pushed back on suggestions that electric vehicles offer near-term relief; without trains, trams or public transport in regional areas, pushing towards electric vehicles "is not possible".
What remains clear is that panic buying alone cannot explain current supply strains. The Australian Competition and Consumer Commission has said it is concerned that prices at fuel pumps have risen in line with wholesale costs, and in some cases even higher; ACCC Commissioner Anna Brakey said "Industry need to explain this wide discrepancy urgently".
Australia faces a genuine choice: maintain the current import-dependent model while hoping supply chains hold, or invest in refining capacity, larger reserves, and regional fuel networks built for resilience. The Iran war has made that choice urgent rather than abstract.