Oil Supply Crisis Deepens as Iran War Impacts Asia

The ongoing conflict involving the United States, Israel, and Iran is sending shockwaves through Asia, disrupting energy supplies and forcing governments to take emergency measures. While Australia has yet to experience direct physical shortages, the country is increasingly vulnerable as it relies heavily on refined petroleum products from Asia, where supply is now constrained.

Jet Fuel Shortages Lead to Flight Cancellations and Economic Adjustments

The most immediate impact is being felt in the jet fuel market. Prices have soared to over $200 per barrel, more than double pre-war levels, leading to widespread flight cancellations. Airlines are grappling with difficulties securing sufficient fuel, and some are considering fare increases and flight reductions. Air New Zealand, for example, canceled 1,100 flights, a scale described as “unprecedented” by CEO Nikhil Ravishankar. The Guardian

Jet fuel is particularly susceptible to shortages due to its stringent quality standards, limited storage capacity, and rapid deterioration when stored for extended periods. The potential closure of the Strait of Hormuz, a critical transit route for Middle Eastern crude oil, exacerbates these concerns.

Regional Responses to the Energy Crisis

Several Asian nations are responding to the crisis with a range of measures:

• China: Restricted exports of refined petroleum products, including jet fuel.
• Thailand: Temporarily banned exports of some fuels, including jet fuel.
• Vietnam: Aviation authorities have warned of potential jet fuel shortages as early as next month, relying on imports for approximately 75% of its aviation fuel. The country is also implementing fuel rationing and emergency conservation measures.
• Bangladesh: Universities have been temporarily closed.
• Philippines: Introduced a four-day workweek.

Australia’s Vulnerability

Australia is identified as particularly vulnerable, importing 90% of its fuel. As of early March 2026, jet fuel reserves covered only around 32 days of supply. ABC News The country relies on refineries in Asia – South Korea, Singapore, Malaysia, and China – for the vast majority of its petrol, diesel, and jet fuel.

Saul Kavonic, head of energy research at MST Marquee, warned that Australia, positioned at the finish of the fuel supply chain, is susceptible to disruptions as Asian suppliers prioritize their own citizens. ABC News

Broader Australian Involvement

Australia has deployed a Boeing E-7 Wedgetail aircraft to the United Arab Emirates and has personnel supporting operations in the region. Wikipedia Australia also maintains infrastructure at the Al Minhad Air Base in Dubai, serving as a regional headquarters and logistics hub. John Menadue

Looking Ahead

The situation remains fluid and highly dependent on the duration and escalation of the conflict in the Middle East. The jet fuel shortage serves as a warning of potential broader crises to come, as nations and companies begin to hoard resources in anticipation of further disruptions. Continued monitoring of the situation and proactive measures to secure alternative supply routes will be crucial for mitigating the impact on Australia and the wider Asian region.