Will America’s war with Iran drive up petrol prices in Australia?
Key takeaways
- Fuel prices have surged since the U.S. and Israel launched a joint strike on Iran.
- Australia has about a 5-week buffer of fuel before stocks run low.
- We have 7 strategies to help you save on high petrol prices.
"Mum, you better fill up the car with petrol because Australia only has 28 days of fuel left. I don't know what that means, but it doesn't sound good."
This was the advice I received from my 12-year-old daughter last night. Colour me surprised that of all the things she learned at school that day, this was what she wanted me to know!
And, she's not wrong. Well, she's a tiny bit wrong; right now we have 36 days of fuel in stock, give or take.
With the U.S. and Israel at war with Iran, does this mean you need to panic about petrol for the foreseeable future?
Australia + petrol: key stats
- We import roughly 80–90% of our liquid fuel
- We store relatively little of our fuel in Australia
- We depend heavily on stable global shipping
- We currently have around 36 days of fuel stored
Unleaded fuel has climbed above $2 per litre in some parts of Australia, even north of $2.40 in some parts of Sydney.
Australia still has fuel stocks and refineries in the Asia Pacific, there's no official shortage – yet. But when the Strait of Hormuz shipping route gets messy, traders get nervous and crude prices jump. Even just the fear of disruption can push prices up.
Compounding that pressure is the fact that we used to refine more of our own fuel locally, but most refineries in Australia have shut down over the last 15 years.
It's become cheaper to import refined petrol and diesel from Asia, so instead of big storage tanks full of Aussie-refined fuel, we rely on ships constantly arriving.
Finder's Consumer Sentiment Tracker shows 10% of Australians, or 2.2 million people, already listed petrol as one of their top 3 most stressful expenses in February, but we could see that surge.
I don't drive or have a car, so this doesn't affect me…
Until it does. Higher petrol ripples through the entire economy.
If the Strait of Hormuz stays restricted for weeks or even months, the cost of crude oil could jump even further.
This means everything from food transport, freight and electricity to how much you pay for a coffee or a burger could be impacted, as businesses will be paying more and will need to pass those costs on to customers.
Economists warn that if this conflict drags on, petrol prices could climb up by tens of cents per litre.
It's like throwing a tiny rock in a pond: a war halfway around the world is making waves right here in Australia. We don't have empty petrol tanks yet, but we might have emptier wallets.
What can you do to save money on fuel?
- Track price cycles in your area and fill up at the bottom where you can, not during the spike. In my area, Tuesday nights are often cheapest, with new higher prices from Wednesday morning.
- Use apps like FuelCheck in NSW and RACQ Fair Fuel in Queensland to track prices and even set up alerts for price drops.
- Download the 7/11 app to access their Fuel Lock function, which can save up to 25c per litre.
- Stack supermarket and loyalty fuel discounts whenever you can.
- Drive smart: things like accelerating gently and avoiding hard braking can reduce fuel burn, while higher speeds chew through petrol faster.
- Keep your tyres properly inflated to improve fuel efficiency.
- Remove excess weight from your car to lower fuel consumption (time for those bags for charity you've been carting around to actually make it to the donation bin!)
Why does war in the Middle East impact Australian petrol prices anyway?
Since late February, the United States and Israel have been carrying out coordinated large-scale military strikes on Iranian military and strategic targets. In turn, Iran has responded with attacks on military bases and allied states across the Middle East.
These active, ongoing military hostilities that many major news organisations are calling a war can threaten our supply chain of oil (and therefore petrol) in Australia.
Iran has shut down or threatened to block key shipping lanes like the Strait of Hormuz, which is a bottleneck that usually carries about 20% of the world's oil.
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