Australians were warned soon after the Middle East conflict started that the country could run short on fuel, with prices rising to record levels owing to disrupted oil supplies.
Now, amid an uneasy peace deal and continued supply disruptions, petrol prices are lower than they were before the conflict began and official warnings over fuel usage have largely disappeared.
Why haven’t we run out of fuel? Why were we told to cut back? And what will happen now?
How did refiners keep getting oil?
The US-Israel war on Iran closed the strait of Hormuz, through which about a third of the world’s crude oil travelled in 2025. Oil is refined into petrol, diesel and other fuel products.
Without oil, the world was at risk of being unable to produce enough fuel for regular needs. The world’s energy watchdog called for lower highway speeds and increased working from home. The International Monetary Fund warned of global recession.
The investment firm UBS estimates that the closure of the strait has removed about 20.5m barrels a day of oil and products, but workarounds have been found.
Suppliers outside the Middle East have proved to be much more flexible and responsive to demand than analysts expected.
Alternative Middle East pipelines have added 4m barrels a day, stockpile releases have added nearly a further 4m, and China has drastically cut imports, bringing the shortfall down to just 7m barrels a day in May, UBS found.
China’s ability to cut imports by about 4m barrels a day surprised analysts; while it is known to have high inventories it doesn’t publish stockpile data.
Supply chains were also redrawn, with Asian nations importing record quantities of refined fuel from the Americas, while India has taken large deliveries from Russia and Venezuela.
Global oil demand is on course to contract by about 1% this year, the International Energy Agency reported on Wednesday, after the initial high prices and lost supply cut demand.
How did Australia keep getting fuel?
Given that Australia has modest refining capabilities, it is always vulnerable to supply cuts.
By April, Brunei and Vietnam had reduced their crude exports to Australia, Singapore cut its petrol, Japan cut its diesel and China supplied less jet fuel.
Offsetting that, Australia bought dramatically more crude from South Korea, jet fuel from Malaysia, and diesel and petrol from the US in April, government data shows. Australian importers even bought 50m litres of jet fuel from the US, which is a rare supply route.
Supply has held up, with 92 ships of fuel arriving in Australia, according to the government, which authorised the release of 20% of reserve stocks onshore and has since extended that until September. At the same time, reserves have been built up to 44 days’ worth of petrol, 39 days’ worth of diesel and 32 days’ worth of jet fuel.
The government also spent $7.5bn to underwrite private companies’ fuel purchases . The funding facility, via the Export Finance Australia agency, has helped five companies to take on 16 diesel shipments and three jet fuel shipments they would not otherwise have bought.
Countries have had different experiences of the fallout from the conflict, with developing economies less able to tap reserves or outbid rivals for supplies. Bangladesh rationed power soon after the conflict started after vital liquified natural gas supplies were disrupted in the region.
Is the oil crisis over?
Brent crude fell below US$80 a barrel on Friday, a level not seen since the beginning of the conflict, amid trader optimism tied to the peace deal. Prices were above US$110 a barrel last month.
The prices rub against repeated warnings from oil executives and analysts that the oil crisis, and fallout on derivatives including fuel, is not over.
The data firm Energy Aspects says even if the peace deal holds, full restoration of normal shipping flows requires mines to be cleared and shippers – and their insurers – convinced the waterway is safe.
Exxon executives have warned that oil inventories are hitting low levels and that prices are at risk of shooting higher.
In the US, crude stockpiles are at their lowest level in more than 40 years, according to the Energy Information Administration.
Related industries, including those producing engine oil and other lubricants, have also warned that damage to refining infrastructure during the conflict could disrupt normal supplies for months, even if trade through the strait reopens in full.
Why are petrol prices lower than before the war?
Higher oil prices at first led to higher wholesale prices, pushing up the retail price at the service station.
Petrol prices spiked to about 260 cents a litre in March but are now less than 170 cents a litre, below prewar levels.
Diesel prices are not quite back to their pre-conflict levels, sitting at about 200 cents a litre or less.
Both prices have tracked wholesale prices at fuel terminals, which have fallen back to near their February levels.
Dr Lurion De Mello, an energy market expert and senior lecturer at Macquarie University, says because Australia secured more fuel supply than it was using, prices fell.
“We have plenty of petrol in the country,” De Mello says. “That’s why petrol prices are quite low at the moment.”
Diesel prices are likely to remain elevated, he says, given a “bigger crunch” for supply.
The federal and state governments’ 32c reduction in fuel tax was also responsible for prices falling. The cut to excise is due to expire on 30 June. The prime minister said on Saturday a decision would be made “over the coming days” on whether to extend the cut.
