The current situation differs significantly from past events like the Gulf Wars or Russia’s invasion of Ukraine, which also led to sharp increases in prices.
“I don’t believe it will happen, but the chance isn’t zero,” commented an expert.
“In fact, it’s higher now than it was in 2022, 2004, and 1991.”
Australians concerned about fuel costs might be uneasy about the sources of oil used by local refineries.
Much of the oil refined in South Korea, destined for the Australian market, originates from the Middle East.
Key suppliers include countries such as Saudi Arabia, Iraq, the UAE, Kuwait, Qatar, and Oman.
More than a third of Singapore’s oil is sourced from Arab nations.
In 2024, Australia imported $7 billion of crude oil.
But very little of that is coming from the Strait of Hormuz.
The largest chunk of oil comes from Malaysia, based on 2024 data. More comes from Vietnam, Brunei and the United States.
Only six per cent comes from the UAE. No other Arab states sold oil directly to Australia that year.
Australia also exports almost as much crude oil as it imports.
AMP economist My Bui said she wasn’t too worried about Australia running out of petrol.
“We export a lot of crude oil, and we have to import a lot of our refined petrol from Asia,” she said.
“But in terms of energy, we are actually a net energy exporter because of LNG and coal.”
Eslake flagged another potential concern for Australia’s fuel supply.
“If that reserve is needed by the United States, they’ll take it,” Eslake said.
“One of the other hallmarks of the Trump administration is that they don’t give a rat’s ass about their traditional allies.”
Simply halting those exports to guarantee local supply wouldn’t necessarily solve the problem.
Australia exports its crude oil and imports refined oil because it’s cheaper to do so.
Australia does not have the capacity to refine all the oil it needs into diesel and petrol. Upping our refining capacity would lead to even higher prices at the pumps.
But having enough petrol in the country won’t necessarily mean prices will go down.
Because of the global market, a barrel of oil in the Middle East will sell for the same price as one in Australia.
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