Australia remains highly susceptible to global energy market fluctuations, with a significant majority of its refined fuels imported from overseas. Recent geopolitical tensions have underscored the nation’s vulnerability. Australians consume approximately 1.1 million barrels of liquid fuels daily, including around 35 billion litres of diesel and 15 billion litres of petrol annually. However, despite a recent ceasefire, the nation’s strategic fuel reserves are critically low, holding only 39 days of petrol, 29 days of diesel, and 30 days of jet fuel. This has prompted government efforts to bolster supplies with key trading partners.
Only a fraction – between 10 to 20 per cent – of Australia’s refined fuels are processed domestically, with the bulk sourced from trading partners like South Korea and Singapore. While little oil is directly imported from the Middle East, ANZ’s commodity strategist, Hynes, estimates about 55 per cent of Australia’s diesel and jet fuel demand is tied to the Persian Gulf, with fuels refined in Asia before reaching Australian shores. Initial global supply disruptions saw terminal gate prices for petrol jump over 60 per cent and diesel more than double. Consumers felt the pinch, with petrol averaging near 250 cents per litre and diesel over 300 cents per litre by late March.
Despite a recent 15 per cent drop in benchmark Brent Crude prices following a ceasefire, experts caution the impact on Australian pump prices could be prolonged. ANZ’s Hynes suggests the physical market will “feel the pain for some time,” potentially months, as supply chain disruptions ripple through. He notes some supply will be permanently lost. Alan Smart from ACIL Allen, an advisory firm, highlights that global oil markets are now more susceptible to geopolitical shifts, potentially extending recovery times. Should imports falter from May, Hynes warns stockpiles could fall below critical levels by October, potentially necessitating measures like pandemic-like restrictions on fuel use. Energy Minister Chris Bowen noted over 50 fuel-carrying ships are en route, yet the medium-term outlook remains uncertain.
