Week Three: Oil Past $100, Reserves Draining, and the Real Cost of 20 Years of Fuel Policy Failure

Week Three: Oil Past $100, Reserves Draining, and the Real Cost of 20 Years of Fuel Policy Failure

Three weeks ago, Brent crude was sitting at $72 a barrel and most Australians were filling up without thinking twice. Today it is $104. The Strait of Hormuz, the 33 kilometre bottleneck through which a fifth of the world's oil supply normally flows, remains effectively closed. And Australia, a country that imports more than 90 per cent of its refined fuel and holds barely 37 days of petrol reserves, is learning what energy dependence actually looks like.

This is not a temporary disruption. This is what happens when two decades of policy decisions finally collide with geopolitics.

What Happened and Why It Matters

On February 28, joint US and Israeli strikes on Iran killed Supreme Leader Ali Khamenei. The retaliation was immediate: missile and drone attacks on US bases, Israeli territory, and Gulf shipping infrastructure. The IRGC declared the Strait of Hormuz a prohibited zone. Tanker transits collapsed from 98 vessels on February 28 to a single ship by March 8. Major shipping lines including Maersk, CMA CGM and Hapag Lloyd all suspended transits entirely.

More than 150 ships now sit anchored outside the strait, waiting.

The International Energy Agency called it "the largest supply disruption in the history of the global oil market." That is not hyperbole. Gulf countries have cut total oil production by at least 10 million barrels per day. The 400 million barrel reserve release coordinated by 32 IEA member countries on March 11, only the sixth time in the agency's history, barely registered on crude prices. Brent pushed through $100 on March 13 and has kept climbing.

The uncomfortable truth is that reserve releases work when the disruption is temporary and limited. When the world's most important chokepoint shuts down indefinitely, 400 million barrels buys time. It does not solve the problem.

Where Australian Prices Stand Right Now

As of today, across more than 8,000 stations we monitor in real time, the national picture looks like this.

unleaded petrol state averages:

Diesel is even worse, averaging 268 to 274 cents per litre across most states. That matters enormously because diesel moves everything: freight, agriculture, mining, construction. Every cent added to diesel is a cent added to the cost of getting food to supermarkets, materials to building sites, and grain to port.

The ACCC launched weekly fuel price monitoring for the first time on March 13, covering 190 regional locations alongside the capital cities. Their finding: Sydney has seen the largest cumulative increase at 67.8 cents per litre since February 20. Perth was hit with a 59.5 cent spike. These are increases that turn a $60 weekly fill into $95.

The Rationing Nobody Wants to Talk About

In regional Australia, the crisis has moved beyond price into supply.

Servos in towns across NSW, Victoria, and South Australia have introduced purchase limits. $20 caps. $50 caps. One station imposed a 25 litre limit per vehicle. In Robinvale, Victoria, all three stations ran dry. A servo owner in New England told local media he chose to ration at $20 per customer to keep the town running for 15 days rather than sell out in five.

These are not isolated incidents. They are the predictable consequence of a supply chain designed for normal conditions being hit by panic buying in the cities. The NRMA reports consumers purchasing four times their normal volumes, stockpiling fuel in jerry cans. That behaviour draws supply away from regional areas that have always relied on thinner distribution networks.

Energy Minister Chris Bowen described the regional shortages as "real and unacceptable." His department has relaxed fuel quality standards for 60 days, allowing higher sulphur fuel normally destined for export to be sold domestically. That adds roughly 100 million litres per month, or about two extra days of national supply. The government has also released 762 million litres from emergency reserves, representing 20 per cent of the baseline minimum stockholding obligation.

Two extra days. That is the margin we are working with.

The Numbers Behind Australia's Vulnerability

Australia holds approximately 1.6 billion litres of petrol (37 days supply), 2.7 billion litres of diesel (30 days), and 800 million litres of jet fuel (29 days). We are the only member of the International Energy Agency that does not meet the mandatory 90 day fuel reserve requirement. We have not met it since 2012.

We have two operational oil refineries: Ampol's Lytton facility in Brisbane and Viva Energy's Geelong refinery near Melbourne. Combined, they produce roughly half of Australia's petrol and a third of its diesel. Everything else arrives on ships.

The Fuel Security Act was amended in November 2025 to make stockpiles more accessible during disruptions and to require mandatory reporting of diesel exhaust fluid shortages. On March 12, fuel security was debated in both the Senate and House of Representatives, with the Maritime Union and crossbenchers criticising successive governments for allowing this vulnerability to develop. Maximum penalties for fuel company breaches have been proposed to rise from $50 million to $100 million.

But penalties do not create fuel. Refineries do, and we spent the last two decades closing them.

the diesel Problem Is the Bigger Story

While petrol grabs the headlines, diesel is the crisis within the crisis. National diesel averages have pushed past 270 cents per litre, with some regional areas seeing prices above 300.

The Australian Trucking Association has warned that diesel above 210 cents triggers industry wide freight rate renegotiations. We are 60 cents past that threshold. Fuel represents 20 to 30 per cent of total road freight operating costs. When diesel goes up 60 cents, the cost of moving a pallet of groceries from warehouse to supermarket goes up with it.

The National Farmers' Federation has warned food prices could rise by up to 50 per cent. Farmers have been accused of hoarding diesel, but as the federation pointed out, harvest season requires bulk purchases that are operationally essential. A header running on diesel during harvest does not have a "wait for cheaper fuel" option.

Then there is the China complication. Beijing has ordered its refiners to halt all fuel exports, threatening roughly 30 per cent of Australia's jet fuel supply. Qantas has flagged fare increases. Air New Zealand has already cut 1,100 flights. Australia must now source jet fuel from South Korea, Taiwan, Singapore, Malaysia, and India, all of which are themselves under supply pressure from the same crisis.

The Profiteering Question

The RACQ has referred major fuel retailers to the ACCC, arguing that prices spiked within two to three days of the conflict starting when the typical wholesale to retail pass through lag is approximately two weeks. The NRMA has explicitly called out petrol profiteering, stating that prices in Sydney, Melbourne, and Brisbane are "well above what would normally be expected at the top of the pricing cycle."

The ACCC has demanded fuel retailers explain their pricing conduct. Whether that results in meaningful action remains to be seen. In previous crises, inquiries have produced lengthy reports and little change.

What the data does show, and our own price tracking across more than 10,000 stations confirms this, is extraordinary price variation within the same city. It is possible to save 80 cents or more per litre by driving to the right suburb. The stations charging the most are not always the ones with the highest costs. They are often the ones betting that enough customers will pay rather than shop around.

What Comes Next

The US Energy Secretary has indicated the Navy may begin escorting ships through the Strait by the end of March. President Trump has demanded allies contribute to the effort. Australia and Japan have both declined to send naval vessels, a decision that may have diplomatic consequences but reflects the reality that neither country has the naval capacity to meaningfully contribute to securing the strait.

Oil analysts expect Brent to remain above $95 per barrel for the next two months, potentially falling below $80 in the third quarter if the strait reopens. If it does not, prices could stay elevated for much longer. The IEA's reserve release buys weeks, not months.

For Australian drivers, the practical calculus is straightforward: fill up at the bottom of the price cycle, track prices in real time with tools like Petrolmate, and avoid panic buying. Topping up at the cheapest station in your area rather than the nearest one can save $15 to $20 per fill at current price spreads. Over a year, that adds up to more than a thousand dollars.

For policymakers, the lesson is harder. Australia's fuel vulnerability did not appear overnight. It was built over decades of refinery closures, missed reserve targets, and assumptions that global supply chains would always function normally. Those assumptions have been tested before, during COVID, during the Suez Ever Given incident, during previous Gulf tensions. But never at this scale.

The question is not whether this crisis will pass. Oil markets are cyclical and the Strait of Hormuz will eventually reopen. The question is whether this time will be different enough to produce structural change: genuine fuel reserves, domestic refining investment, and an honest reckoning with what energy security actually costs.

Every previous crisis has produced promises. None has produced 90 days of reserves.

This one is not over yet. We will keep tracking it.