In response to growing fuel shortages in regional Australia and concerns over global supply disruptions due to the Middle East conflict, Energy Minister Chris Bowen has announced a reduction in the country’s fuel stockpile requirements.

The emergency measures will see the mandatory diesel reserves decrease from 2.7 billion liters to 2.2 billion liters. Similarly, petrol stock requirements will be lowered from 1 billion liters to 700 million liters.

Bowen emphasized that the decision aims to provide fuel companies with greater flexibility in managing supply chains, enabling them to prioritize stock distribution to regional areas.

“The minimum stock obligation, introduced by the Albanese government in 2023, was designed for situations just like this,” Bowen stated. “Now, it has become necessary to utilize it.”

He further explained, “This adjustment allows fuel companies to better manage their supply chains. However, the additional fuel will not be released immediately.”

Bowen concluded by noting that he has already engaged in discussions with fuel companies and will continue to do so, ensuring that the benefits of these changes reach regional Australia effectively.

Bowen said there could be threats to future supply if the conflict in the Middle East continues.

‘Will there be further threats to fuel supply if the international circumstance continues to worsen? Of course, that is a realistic thing, which governments should prepare for,’ Bowen said.

Energy Minister Chris Bowen has lowered national fuel stockpile requirements for Australian petrol companies to make it easier for them to release supply to regional areas

Iranian boats appear to have struck two fuel tankers in the Strait of Hormuz, setting them ablaze and killing one crew member 

When pressed on potential fuel rationing, Bowen said the Fuel Emergency Act gives him various powers – though said rationing was not being contemplated ‘at this point’. 

The intervention comes as oil markets were rocked by escalating conflict in the Middle East, with Brent crude surging above $100 a barrel after reports Iran had laid mines in the Strait of Hormuz,  a crucial shipping route that carries about 20 per cent of the world’s oil and gas. 

Images showed burning tankers in the region after apparent Iranian attacks, as Iran’s new Supreme Leader Mojtaba Khamenei declared the strategic waterway would remain closed to maintain pressure.

‘The lever of blocking the Strait of Hormuz must continue to be used,’ he said on Thursday.

The escalating conflict has heightened fears Australia could face fuel shortages, with the nation currently holding just 36 days’ worth of petrol supply, 32 days of diesel and 29 days of jet fuel.

In response, the federal government has temporarily relaxed fuel quality standards for the next 60 days, allowing higher-sulphur fuel imports to boost the domestic market by an extra 100 million litres per month.

Bowen’s latest intervention came after he declared the situation a crisis in parliament yesterday.

‘A national crisis is a time for leadership on both sides of the House,’ Bowen told parliament on Thursday.

Prime Minister Anthony Albanese has warned that the consequences of the crisis could have wide-ranging impacts on the economy

The Thai-flagged cargo ship Mayuree Naree on fire after being hit by Iranian missiles in the Strait of Hormuz

‘Do I think if a fishing company can’t get access to diesel for that fishing, do I think it’s a crisis? Yes, I do.’

His comments come as fishing trawlers warn they are struggling to secure diesel supplies.

Pavo Walker, chief executive of Walker Seafoods, Australia’s largest wild-caught tuna and swordfish company, said vessels across the eastern seaboard were finding it increasingly difficult to obtain fuel.

‘The eastern seaboard of Australia is running out of fuel. No one can guarantee us any fuel for our fishing vessels,’ he said.

‘We’ve got no fuel, so we can’t go to sea and we can’t catch fish.’

Meanwhile, some petrol stations in regional areas have resorted to limiting drivers to only $20 worth of fuel to ensure locals can fill up in an emergency, while some had run out completely.

Bowen said shortages in regional areas were being driven by surging demand rather than a lack of overall supply, with panic buying placing extreme pressure on distribution networks.

‘We recognise fully that in regional areas in particular there are shortages in certain locations, and that the supply chain is under huge pressure as we have seen a massive increase in demand,’ he told parliament.

Some petrol stations in regional areas have resorted to limiting drivers to only $20 worth of fuel to ensure locals can fill up in an emergency, while some had run out completely. 

‘The rush to buy fuel is unprecedented, outstripping the surge at the outbreak of the Russia-Ukraine war in 2022.’

The minister said some bulk customers were purchasing up to four times their usual fuel volumes.

Meanwhile, the International Energy Agency has warned the Middle East conflict could trigger an oil shock even larger than the crisis of the 1970s, when Arab nations imposed a crippling embargo on Western countries.

‘The war in the Middle East is creating the largest supply disruption in the history of the global oil market,’ the agency said in its monthly report.

Analysts at US investment bank Goldman Sachs have also warned oil prices could surge to $150 a barrel if the Strait of Hormuz remains disrupted – a scenario that would likely drive inflation higher and place renewed upward pressure on interest rates.

Prime Minister Anthony Albanese said prolonged conflict could have wide-ranging consequences for the global and domestic economy.

‘The longer the conflict in the Middle East goes on, obviously the more significant the impact will be on the global economy,’ he said.

‘If the Strait of Hormuz shipping route remains effectively closed then that will have ongoing consequences for fuel prices, production, supply chains and of course an inflationary impact right around the world.

‘This is internationally a very challenging time … we’re working with industry, we’re working with the National Farmers Federation, we’re making sure that we put in place all the appropriate measures to ensure there is fuel security in this country.’