706 Tankers, Three Oil Price Scenarios, and the 48 Days Standing Between Australia and a Fuel Crisis

706 Tankers, Three Oil Price Scenarios, and the 48 Days Standing Between Australia and a Fuel Crisis

On Friday evening, most Australians were starting their weekend. Within hours, coordinated US and Israeli strikes under Operation Epic Fury killed Iran's Supreme Leader Ali Khamenei and struck military facilities across the country. By Saturday morning, Iran's Revolutionary Guard Corps had transmitted warnings via VHF radio to every vessel in the Strait of Hormuz: no ships would be permitted to pass.

Five days later, this is no longer a breaking news story. It is now an economic event that will be felt at every servo, every freight depot, and every supermarket loading dock in the country. Here is what is actually happening, based on shipping data, economic modelling, and the numbers on the board right now.

The Strait by the Numbers

The Strait of Hormuz is 33 kilometres wide at its narrowest point. The shipping lanes are even tighter. Two inbound lanes, two outbound lanes, each just three kilometres wide, separated by a three kilometre buffer zone. Every day this year, an average of 19.8 million barrels of crude oil has passed through those lanes. That is roughly 20 per cent of all seaborne oil on the planet.

On March 1, three tankers carrying 2.8 million barrels made it through. That is an 86 per cent drop from the daily average. By March 4, the IRGC declared complete control of the strait.

Right now, 706 vessels are queued across the Persian Gulf, the Gulf of Oman, and the Arabian Sea. That breaks down to 334 crude oil tankers, 109 vessels carrying dirty petroleum products, and 263 transporting clean petroleum products. They are sitting there burning fuel, paying crew, and waiting for permission that may not come for weeks.

The first container ship casualty came early. The Egyptian flagged Safeen Prestige, a 1,740 TEU feeder owned by Transmar International Shipping of Abu Dhabi, was struck by a projectile two nautical miles off Oman while transiting eastbound. The crew abandoned the vessel after a fire broke out in the engine room. All survived. Around 140 container ships remain trapped in the region, with MSC and CMA CGM the most exposed operators.

The Tankers They Actually Hit

The attacks themselves tell a story about how Iran is enforcing this closure.

The first vessel struck was the MV Skylight, a Palau flagged tanker hit approximately five nautical miles north of Khasab Port, Oman on March 1. Twenty crew members, 15 Indian and 5 Iranian nationals, were evacuated. At least four were injured. The vessel caught fire and began sinking. Here is the detail most outlets missed: the Skylight was a US Treasury sanctioned shadow fleet vessel used to transport Iranian petroleum products. Iran may have mistakenly struck one of its own sanctioned tankers.

On March 2, a Marshall Islands flagged tanker was attacked by a drone boat roughly 52 nautical miles off the coast of Muscat, Oman. An explosion ripped through the main engine room. One crew member was killed, the first fatality of the crisis at sea.

Two more vessels, the MKD Vyom and the Hercules Star, were confirmed struck by the UK Maritime Trade Operations Centre. And then came the Safeen Prestige, the container ship, proving Iran was not limiting its enforcement to oil tankers.

In total, at least four ships have been attacked, one crew member killed, and multiple vessels set ablaze. The message is unambiguous.

What a Supertanker Costs Right Now

If you want to understand how serious the shipping industry considers this crisis, look at freight rates. The benchmark daily rate for a Very Large Crude Carrier, one of those supertankers that carries two million barrels of oil, hit an all time record of US$423,736 per day on Monday. Some reports put it even higher, at US$438,913 per day on March 2. That is more than ten times higher than January levels and a 94 per cent increase from the previous Friday alone.

To translate that into something tangible: the freight cost to ship crude from the Middle East Gulf to China hit US$15.32 per barrel. That is more than 20 per cent of the value of the oil itself. You are paying a fifth of the product's price just to move it across the ocean.

But the freight rate is only part of the cost. All 12 members of the International Group of Protection and Indemnity Clubs, which collectively cover 90 per cent of the world's ocean going tonnage, gave 72 hours notice of cancellation of war cover in the Gulf. Protection and indemnity insurance was removed effective March 5. War risk premiums surged from 0.2 per cent to over 1.5 per cent of hull value. For a US$150 million vessel, that is an additional US$2.25 million per trip.

When you cannot insure a vessel, you cannot sail it. Even if the strait reopened tomorrow, the insurance market would take months to normalise. Those costs flow directly into the price of every barrel of oil, every container of goods, and ultimately every litre of fuel sold in Australia.

Iran Hit Qatar. That Changes Everything.

The detail that should concern Australians most is not the oil tanker chaos. It is what happened to Qatar.

In retaliation for Operation Epic Fury, Iran launched drones at Qatar's Ras Laffan Industrial City, home to QatarEnergy's massive liquefied natural gas operations. A second drone struck a power plant in Mesaieed. No one was killed, but the consequences were immediate. QatarEnergy ceased all LNG production.

Qatar is the world's second largest LNG exporter, responsible for roughly 20 per cent of global supply. At least 13 empty LNG tankers on the eastern side of the chokepoint diverted away from planned Qatar and UAE loadings. Within hours of the shutdown, benchmark Dutch and British wholesale gas prices surged nearly 50 per cent. Asian LNG prices jumped 39 per cent.

Australia is a major LNG exporter itself, so we are partially insulated on the gas side. But we import a significant portion of our refined fuel, and any disruption to global energy markets raises costs across the entire supply chain. When gas prices spike in Europe and Asia, refineries everywhere face higher input costs, and those costs land on Australian motorists.

The Retaliation Was Not Limited to Oil

Iran's response to Operation Epic Fury extended far beyond the strait. The IRGC launched dozens of drones and ballistic missiles at targets across six countries in what Tehran called Operation True Promise IV.

The targets included four US bases: Al Udeid Air Base in Qatar, Ali Al Salem Air Base in Kuwait, Al Dhafra Air Base in the UAE, and the US Navy Fifth Fleet headquarters in Bahrain. Three US service members were killed and five were seriously wounded, according to US Central Command.

Civilian casualties across the region have been significant. Three people were killed and 58 injured in Iranian attacks on the UAE. One person was killed and 32 injured in Kuwait. Three were wounded in Bahrain.

This is not a contained conflict. Iran has struck six different countries in retaliation. That level of regional escalation has no modern precedent in Gulf conflicts. It is why the economic models are being rewritten in real time.

What Operation Epic Fury Actually Did

To understand Iran's response, you need to understand the scale of what the US and Israel did to provoke it.

The strikes began at approximately 7:00 AM Tehran time on February 28. President Trump announced the operation via an eight minute video on Truth Social at 2:00 AM eastern time. The Lincoln and Gerald R. Ford carrier strike groups, the largest buildup of US firepower in the Middle East in a generation, supported B-2 bombers, stealth fighter jets, and cruise missiles that struck more than 1,000 targets in the first 24 hours.

According to Trump and Israeli officials, 49 top Iranian leaders were eliminated, including the Supreme Leader. Ten Iranian naval vessels were destroyed or sunk. IRGC command and control facilities, air defence capabilities, missile and drone launch sites, military airfields, and nuclear sites were all hit.

The scale of the operation explains why Iran's response has been so sweeping. When you decapitate a nation's leadership and destroy its naval capacity in a single night, the remaining military apparatus defaults to its most powerful asymmetric weapon: control of the strait that carries a fifth of the world's oil.

Iran's Arsenal in the Strait

Iran has spent decades preparing for exactly this scenario. The IRGC maintains an estimated stockpile of 5,000 to 6,000 naval mines, including the EM-52 rocket propelled rising mine, a Chinese produced weapon with a 272 kilogram high explosive warhead that sits on the ocean floor until it detects a target, then launches itself upward. These mines are deployable in waters up to 180 metres deep and are extremely slow to clear.

Beyond mines, the IRGC is estimated to have upwards of 3,000 fast attack boats capable of mine laying, swarm tactics, and attacks on larger vessels. They also have the Khalij Fars anti ship ballistic missile with a range of roughly 300 kilometres and an electro optical terminal guidance seeker designed to hit moving ships.

This arsenal exists specifically to hold Hormuz hostage. Experts estimate up to 16 mine countermeasure vessels might be needed just to keep the strait clear, and submerged mines could take weeks or longer to sweep. A US commander confirmed on March 4 that the strait was clear of Iranian navy ships, but the mine and missile threats persist. Clearing the physical threat is a far longer operation than sinking surface vessels.

Three Scenarios From Westpac

Westpac's economics team has published three scenarios that map out what happens next, and each one carries a different price tag for Australian motorists.

Scenario one: Iranian production disruption only. If the conflict stays contained and only Iran's own oil exports are cut off, that removes about 4 per cent of global oil production. Brent crude rises to around US$100 per barrel. Australian CPI increases by 0.7 percentage points. The impact on GDP is marginal, less than 0.1 percentage points. At the pump, this means roughly 7 to 10 cents per litre more than pre crisis levels. Uncomfortable but manageable.

Scenario two: one month Hormuz disruption. If shipping through the strait remains disrupted for up to a month, Brent spikes to US$113 per barrel. Australia's CPI rises by a full percentage point. GDP growth drops 0.2 percentage points. At the bowser, you are looking at 15 to 20 cents per litre above where prices sat a week ago. For a 60 litre tank, that is an extra $9 to $12 per fill.

Scenario three: three month disruption. If this drags on for three months, Brent crude could hit US$185 per barrel. The CPI spikes 1.5 percentage points at its peak. GDP falls 0.5 percentage points by end of 2026. At the pump, prices could exceed $2.50 per litre nationally, with regional areas pushing past $3.00.

Wood Mackenzie supports this range, forecasting US$150 per barrel if Hormuz stays shut. Oxford Economics models Brent at US$130 in the severe scenario, with world GDP approximately 0.3 per cent below baseline.

Goldman Sachs has already raised its Q2 2026 Brent forecast by US$10 to US$76 per barrel, and that was before the IRGC declared complete control of the strait. The consensus across every major forecaster is clear: a prolonged disruption changes the economic outlook for every country that imports oil. Australia is one of them.

Where Prices Actually Sit Right Now

According to Petrolmate data as of this morning, here is the national picture.

Unleaded petrol averages 194.1 cents per litre nationally, with a median of 189.9 cents. Diesel averages 195.6 cents with a median of 192.5 cents. But the spread is extraordinary. The cheapest unleaded in the country right now is 146.7 cents at Costco Casuarina in Perth. The most expensive is 395.0 cents at Milingimbi in remote Northern Territory.

That is a $2.48 per litre gap between the cheapest and most expensive unleaded in the same country.

State by state, the week over week movements tell the real story.

Victoria has been hit hardest. Average unleaded jumped from 178.6 cents to 197.5 cents in seven days, a rise of nearly 19 cents per litre. New South Wales went from 174.6 to 190.2 cents, up 15.6 cents. Western Australia climbed from 174.3 to 184.9 cents, up 10.6 cents. South Australia moved from 177.7 to 185.2 cents, up 7.5 cents. Queensland rose from 187.3 to 195.8 cents, up 8.5 cents.

Diesel follows the same trajectory. SA diesel jumped from 193.2 to 201.8 cents, a rise of 8.6 cents. NSW went from 182.2 to 189.0 cents. VIC from 181.0 to 186.3 cents. WA from 181.2 to 185.6 cents.

The important thing to understand is that these increases reflect only the initial oil price surge of 10 to 13 per cent on Brent crude. Global oil market movements take seven to ten days to fully flow through to Australian bowsers. Which means the prices you see today are still based on pre crisis oil costs. The real impact hits next week.

The Profiteering Question

The NRMA has formally called on the ACCC to clamp down on petrol profiteering, noting that half the stations in Sydney, Melbourne, and Brisbane were charging close to $2.20 per litre within days of the crisis. RACQ went further, formally referring fuel companies to the ACCC. Their argument: global oil price changes normally take roughly two weeks to reach Australian bowsers, not two days. The speed of the price increases suggests retailers are pricing in anticipated future costs rather than actual wholesale cost increases.

Treasurer Jim Chalmers has written to the ACCC to monitor petrol price gouging, warning against opportunistic increases.

Whether you call it profiteering or forward pricing, the result for motorists is the same. You are paying crisis prices before the crisis costs have actually arrived. RACQ noted that the major retailers led the price jump, which appeared unjustified by the timeline of actual wholesale cost increases.

The Panic Buying Problem

Over the weekend, social media filled with videos of queues at servos across the country. One Melbourne woman posted a video showing a line of cars stretching more than a kilometre at a suburban petrol station. The scenes echoed the toilet paper rush of 2020, except this time people were filling jerry cans and topping up cars that were already half full.

Energy Minister Chris Bowen addressed parliament with a message aimed directly at those queues. Australia has 36 days of petrol reserves, 34 days of diesel, and 32 days of jet fuel. Those are the highest levels in 15 years.

But here is the number Bowen did not emphasise. The International Energy Agency requires all member countries to hold 90 days of oil reserves. Australia has 48 days of total coverage. That makes us the worst positioned of the 27 net oil importing countries in the IEA. Dead last. The average among IEA members is 141 days. Even New Zealand, the second lowest, holds 92 days.

Two Refineries, 70 Per Cent Import Dependency, and $2.3 Billion in Subsidies

Australia once had seven oil refineries. We are down to two. Ampol's Lytton refinery in Brisbane processes about 110,000 barrels per day. Viva Energy's Geelong refinery near Melbourne handles around 120,000. Together, they cover less than 30 per cent of Australia's fuel needs.

The rest is imported as refined product. More than 70 per cent of our fuel arrives on tankers from refineries in Singapore, South Korea, Japan, and India. The crude oil those two Australian refineries process is itself mostly imported. The government pays Ampol and Viva up to $2.3 billion through 2030 under the Fuel Security Services Payment just to keep those plants running. Ampol retains the flexibility to close Lytton earlier under specific circumstances. Without subsidies, both would likely close.

The Maritime Union of Australia has been among the loudest voices calling out this vulnerability. Their position is straightforward: an island nation that imports 70 per cent of its fuel and has less than 50 days of reserves is not energy secure, regardless of what the minister says.

The Fuel Security Act 2021 was supposed to fix this, with the government committed to reaching IEA compliance by 2026. That deadline has arrived and we are still well short.

The Alternative Routes Problem

Could oil simply go around the strait? The short answer is: some of it, not enough of it, and not quickly.

Saudi Arabia has the East West Pipeline that can move about 5 million barrels per day from the Gulf to the Red Sea, bypassing Hormuz entirely. The UAE has the Habshan Fujairah pipeline carrying 1.8 million barrels daily to the Indian Ocean coast. Together, these alternatives can reroute roughly a third of normal Hormuz flows.

That leaves two thirds stranded. Roughly 13 million barrels per day of crude and refined products have no alternative route without the strait. Ships could theoretically sail around the entire Arabian Peninsula and through the Suez Canal, but that adds weeks to transit times. Maersk has already begun rerouting Middle East services via the Cape of Good Hope, adding two to three weeks to every voyage.

Egypt has proposed using the SUMED pipeline to move Saudi oil from Yanbu through Egypt to the Mediterranean as a land based alternative for European markets. But these are partial solutions to an enormous problem.

Asia Is Most Exposed, and That Affects Us

China, India, Japan, and South Korea account for nearly 70 per cent of all shipments through the Strait of Hormuz. China, the world's largest crude oil importer and the buyer of more than 80 per cent of Iran's oil, sources 50 per cent of its crude imports through the strait. China's LNG inventories at end of February stood at 7.6 million tons, providing some short term cover, but experts warn China could face real problems within two months if the crisis drags on.

India faces an even more acute vulnerability. Sixty per cent of its oil imports come from the Middle East, and more than half of its LNG imports are Gulf linked. Many of India's LNG contracts are Brent indexed, creating a dual physical and financial shock: the crude price spike lifts both oil import costs and LNG contract prices simultaneously.

Why does Asia's exposure matter for Australia? Because when Asian refineries face supply disruptions, the refined fuel that Australia imports from Singapore, South Korea, and Japan becomes scarcer and more expensive. Our 70 per cent import dependency means we are downstream of every supply chain disruption in Asia, even if our direct exposure to Hormuz is relatively modest.

What History Tells Us

The closest parallel to what is happening now is the Tanker War of 1987 to 1988, when Iran and Iraq attacked each other's oil tankers in the Gulf. The US ultimately intervened with naval escorts under Operation Earnest Will. Oil prices spiked briefly but the strait never actually closed.

During the 1973 Arab oil embargo, oil prices quadrupled from US$3 to US$12 per barrel. But that was a supply cutoff by choice, not a physical blockade, and it removed about 4.4 million barrels per day from the market.

The 1979 Iranian Revolution removed Iranian production and prices doubled. The 1990 Gulf War briefly threatened Gulf shipping but the strait remained open. When allied forces launched Operation Desert Storm, WTI crude dropped US$10 per barrel in a single day, a 33 per cent fall, showing how quickly prices can reverse when military action succeeds.

What makes 2026 different is the scale. A full Hormuz closure removes approximately 20 million barrels per day, roughly 20 per cent of world petroleum consumption. Analysts describe it as three to five times the magnitude of the 1973 embargo in absolute terms. None of the historical precedents match this level of physical disruption to oil flows.

What to Do Right Now

The practical advice has not changed, even as the situation has escalated.

Do not panic buy. You are making the problem worse. Fill your tank when it needs filling, at the bottom of the price cycle if you can time it. Use Petrolmate's interactive fuel map to find the cheapest station near you before you drive.

Shop around aggressively. The spread between the 10th percentile and 90th percentile for unleaded nationally is 48.4 cents per litre right now. That gap represents real money. On a 60 litre tank, filling up at a cheaper station versus an expensive one in the same area can save you $29.

Suburbs like Blacktown and Parramatta in western Sydney or Dandenong and Frankston in Melbourne's south east consistently offer better value than inner city stations. The cheapest unleaded in the country right now is Costco in Casuarina, Perth at 146.7 cents. In Melbourne, look for APCO stations near Geelong where prices start at 149.7 cents.

Watch diesel closely. If you drive a diesel vehicle or run a business that relies on freight, diesel is your canary. Australia has only 34 days of diesel reserves, and diesel is critical for mining, agriculture, and trucking. In a prolonged supply crunch, diesel premiums widen before petrol premiums do. The transport industry is already preparing for the impact of limited diesel availability.

Understand the lag. Prices at the bowser today reflect oil costs from 7 to 10 days ago. The full impact of the current crisis has not landed yet. If you can fill up now at a reasonable price, do it. But do not fill jerry cans and do not create a queue.

Watch the ACCC. The profiteering question is live. If you see prices at your local servo that seem disconnected from reality, report them.

Where This Goes Next

Nobody knows how long the strait stays effectively closed. The IRGC has declared complete control. The US has deployed additional carrier groups but has not yet attempted to force passage. Trump has signalled that naval escorts for allied shipping are being planned but has set no timeline.

The mine threat is the wildcard. Even after surface threats are neutralised, Iran's 5,000 to 6,000 mines are extremely difficult to clear. Military analysts estimate this could take weeks or longer, and the insurance industry will demand verified mine clearance before resuming coverage.

The most likely path forward, based on the pattern of previous Gulf confrontations, is a gradual de escalation over weeks rather than days. The strait will probably reopen in some form, possibly with US naval escorts, possibly through a negotiated arrangement. But even after it reopens, the insurance market will take months to normalise. And the precedent of a successful closure, even a temporary one, will permanently change how global markets price Hormuz risk.

For Australian motorists, the next two weeks are the critical window. That is when the oil price surge fully flows through to bowser prices. Watch the Brent crude price. If it holds below US$100, the damage is manageable. If it pushes past US$113, start budgeting for $2.20 plus per litre. If it reaches US$150 or above, the economic consequences extend well beyond the servo into groceries, freight, airfares, and everything else that moves on diesel.

This is the kind of story that reveals whether the policy decisions of the last decade were the right ones. Closing five refineries. Never building strategic reserves to international standards. Importing 70 per cent of our fuel from overseas. Those choices are being stress tested right now, and the next few weeks will show whether they hold.

Keep watching. Keep filling up smart. And check Petrolmate before every trip to the servo, because in a market this volatile, the difference between the cheapest and most expensive station in your suburb could be the difference between $80 and $110 on a full tank.

*For a comprehensive, data-driven analysis of the crisis including state-by-state price tables and household cost calculations, read our Special Report: Petrol Prices Just Rose 31 Cents in Three Weeks.*