Australia is among 32 member states that signed an IEA treaty in the 1970s following Middle East oil shocks, committing to maintain 90 days of the previous year's net oil imports. Strip away the talking points and what remains is an awkward fact: this nation is the only advanced IEA member failing to meet that obligation, and has been since 2012.
The fundamental question is whether this represents genuine strategic incompetence or a rational policy choice rendered invisible by bureaucratic complexity. Energy markets have been rattled and fuel prices have soared in the wake of the war, sparked by United States and Israeli strikes on Iran in late February. The Strait of Hormuz, a key route for around a fifth of the world's oil and gas exports on Iran's southern border, has been choked off. These disruptions have thrown fuel security back into the national conversation, but they have also exposed the depth of confusion about what Australia's reserve position actually is.
Minister Chris Bowen argues that critics are conflating two different measurements. The IEA 90-day guideline is about having stocks available to sell, not to supply domestically. Australia currently holds in excess of the minimum stock obligations: 36 days' worth of petrol, 34 days' worth of diesel, and 32 days' worth of jet fuel. The government has therefore reframed the debate away from the international obligation and towards what it calls the Minimum Stockholding Obligation (MSO), a domestic measure established through the Fuel Security Act 2021 to provide a legislative framework for government to establish a national fuel reserve.
This semantic distinction matters, but it also conceals a legitimate tension. Most IEA members hold an average of 140 days of their previous year's net imports while Australia holds between 50 and 58 days. Australia alone holds below 90 days, period. The minister's argument that domestic consumption measures differ from import measures is technically accurate. But the counter-argument deserves serious consideration: if a global supply shock hits, the difference between theoretical measures collapses into practical desperation.
Consider the structural constraint. 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. Australia imports about 90 per cent of its refined fuel and crude oil from suppliers in Singapore, South Korea and Japan, plus a few Middle Eastern producers. This structure is not accidental; it reflects decades of rational economic logic. Asian refineries operate at much larger scale and lower cost. Rebuilding domestic capacity would be economically inefficient under normal conditions.
The problem emerges when normal conditions cease to exist. Local shortages have forced the release of nearly 20% of reserves (762 million litres) to support independent retailers in regional areas. Towns like Robinvale in Victoria's northwest have experienced fuel rationing. The shortage has had major impact on the Robinvale community, largely made up of farmers and primary producers, with operators saying it is the worst disruption they have seen in decades. These are not theoretical scenarios; they are unfolding realities.
The cost of full compliance is instructive. Resources Minister Madeleine King said complying with the 90-day requirement would cost at least $20 billion once storage infrastructure, fuel purchases and distribution systems were taken into account. That sum would reshape budget priorities for years. Fiscal responsibility demands asking whether that expense buys commensurate security or whether there is a smarter path.
Both major parties share culpability for allowing refining capacity to contract over two decades. A trend has seen our backup fuel supply diminish from its high of 310 days in 2002. Yet this was not driven by malice. Industrial economics shifted; fuel production moved offshore because that made economic sense. The mistake lay in failing to ring-fence a strategic reserve as a hedge against precisely the shocks now arriving.
The genuine complexity is this: Australia needs better fuel security, but not necessarily through blind pursuit of the 90-day target as originally conceived. In a world where a single conflict can immobilise a fifth of global oil trade overnight, relying on luck is not a strategy. In an emergency it could take 30 to 40 days to ship crude to Singapore for refining and then transport the fuel back to Australia. The reserve window, if supply chains break, may be narrower than the IEA standard assumes.
The counter-argument is equally valid: Diversity of supply has been the "deliberate" strategy to manage reserves, resources, and backup. Governments have decided that having that diversity of supply, complemented by a moderate amount of onshore storage, would be enough. Most suppliers continue to be "reliable" through the crisis. Some, like South Korea, hold over 200 days of their national domestic demand. This suggests Australia's reliance on diverse suppliers may actually be more resilient than maintaining larger domestic stockpiles.
What Australia cannot do is continue this drift. Either the nation commits the capital and political will to build strategic reserves closer to international standards, accepting the costs that will eventually flow to fuel prices. Or it explicitly negotiates with the IEA to redefine the obligation in light of how fuel markets have fundamentally transformed since 1974. Reasonable people can disagree on which path serves the national interest better. But the current position of non-compliance without serious diplomatic engagement is neither sustainable nor credible. The 90-day question is not truly about numbers on a spreadsheet. It is about whether Australia acknowledges its vulnerability honestly and acts accordingly.