The de-facto closure of the Strait of Hormuz following last month’s US-Israeli strikes on Iran cut the primary flow of Middle Eastern crude oil to Asian refineries. Those Asian facilities supply 90 percent of Australia’s fuel. Now the geopolitical bottleneck is draining Australian pumps. Diesel prices passed 3 a litre nationwide on Wednesday. Hundreds of service stations across New South Wales, Victoria, and Queensland are completely out of unleaded and diesel fuel.
The federal government is preparing for global oil prices to exceed US120 a barrel. As domestic fuel prices surge, Australian Energy Minister Chris Bowen is facing intense political backlash. Bowen told Australians to “work from home” and drive slower to conserve petrol. He defended the decision to withhold the national strategic fuel reserve. He said the supply must be kept for a “rainy day” rather than deployed to ease the immediate shortage.
Six fuel ships scheduled to arrive in Australia from Singapore, Malaysia, and South Korea were canceled or deferred. The supply drop forced the federal government to temporarily lower the national diesel flashpoint standard from 61.5 degrees Celsius to 60.5 degrees Celsius for six months. The rule change allows 100 million extra litres of fuel imports from the United States, Canada, and Europe.
The government appointed former Australian Energy Regulator boss Anthea Harris as the new fuel tsar to manage the logistics. Deputy Opposition Leader Jane Hume heavily criticized Bowen. She argued the tsar appointment would be unnecessary if the energy minister managed the crisis properly from the start. On the ground, the severe shortages triggered a 50 percent surge in drive-off thefts at petrol stations.