The Growing Threat to Fuel Security

For a third week, the conflict in the Middle East is throttling global oil supplies. Australia is considering “light touch” ways to conserve fuel, such as encouraging remote work and increased public transport usage. However, other nations have implemented more drastic measures, including four-day work weeks and temporary school closures, to mitigate crippling fuel shortfalls and economic fallout.

The situation is particularly concerning for Australia, which relies on imports from Asian refineries for 80 percent of its liquid fuel needs. Many of these refineries depend on crude oil shipments through the Strait of Hormuz, which has been effectively blockaded since February 28.

Regional Responses to the Crisis

South Korea

South Korea, a major fuel supplier to Australia, has ordered its public sector to reduce passenger car employ and launched a national fuel conservation campaign. The country has likewise implemented an export cap on refined fuels, limiting exports to match 2025 import volumes. South Korea relies on the Middle East for approximately 70 percent of its crude oil supply. Bloomberg

The Philippines

The Philippines has declared a year-long “national energy emergency,” allowing the government to create advance payments for fuel procurement and crack down on hoarding. The country is also considering shorter work weeks and seeking oil from sanctioned countries.

China

China has imposed a ban on all refined fuel exports, including petrol, diesel, and jet fuel. This move is particularly alarming for aviation fuel supplies, as China is a dominant global supplier, accounting for more than 40 percent of Australia’s imported jet fuel.

Bangladesh

Bangladesh is rationing fuel sales, limiting purchases for motorcycles and private cars. The government has also implemented a four-day workweek and is considering public holidays to conserve energy, and fuel.

India

India, the world’s fourth-largest refiner, has been significantly impacted by the drop in crude oil deliveries from the Middle East. Although not banning exports, India will prioritize fuel requests from neighboring countries only if surplus supplies are available.

Sri Lanka

Sri Lanka has implemented a four-day workweek and is requiring schools and public institutions to close on Wednesdays to conserve fuel. Fuel rationing has also been introduced, limiting purchases per vehicle per week.

International Responses

Europe

Italy has temporarily cut fuel excise taxes by €0.25 per litre, while Spain has launched a multibillion-dollar package to reduce fuel taxes by up to €0.30 per litre. Germany has banned service stations from raising prices more than once a day, and Slovenia has begun rationing fuel.

United States

The United States has temporarily suspended environmental restrictions on high-ethanol petrol and authorized the release of oil from its strategic reserve. It is also easing restrictions on sanctioned Venezuelan and Russian oil.

Australia’s Position

Australia has tapped into its strategic stockpiles, releasing over 700 million litres of fuel, enough to cover five days of petrol and six days of diesel consumption. The government has also temporarily relaxed fuel standards and secured additional fuel shipments. Discussions are underway regarding encouraging remote work, increased public transport usage, and carpooling. The Sydney Morning Herald