Oil Crisis 2026: Fuel Queues, Iran Tensions & Australia’s PM Response

March 19, 2026 James Parker - Business Editor Business

Australians are facing a familiar, unsettling feeling: queues at the petrol station. Whereas not yet at the levels seen in the 1970s, the rising geopolitical tensions in the Middle East are prompting a degree of anxiety about fuel supply, and the Albanese government’s calm response is drawing scrutiny. Prime Minister Anthony Albanese’s preference for avoiding alarmist rhetoric, while understandable, may not be enough to quell concerns as the situation evolves, particularly given Australia’s unique vulnerabilities.

The current unease stems from escalating conflict between Iran and its adversaries, potentially disrupting oil flows through the Strait of Hormuz – a critical chokepoint for global energy markets. Approximately 20% of the world’s oil supply transits this narrow waterway, and Iran’s recent actions, including shutting down the strait to increase costs for the US, have heightened fears of a significant supply shock. AMP economist Shane Oliver notes this situation is potentially “four times as big” as the 1979 crisis triggered by the Iranian Revolution, which saw rationing implemented across Australia. As reported by The Age, that earlier crisis involved alternating days for odd and even number plates, and weekend closures of petrol stations.

The Fuel Tsar and a Familiar Playbook

In response, the Albanese government has appointed a national fuel supply coordinator, a move reminiscent of the crisis management strategies employed during the COVID-19 pandemic. This appointment, coupled with a convening of the national cabinet – the forum for premiers and chief ministers – signals a recognition of the seriousness of the situation. Although, the government’s messaging remains focused on the present, emphasizing that current fuel supplies are unaffected. “No ships that were scheduled to arrive haven’t arrived. Our fuel supply is here,” Albanese stated on Thursday. This approach, while intended to reassure, skirts around the potential for future disruptions as pre-war shipping arrangements begin to unwind.

The government’s strategy echoes its handling of the pandemic, but the nature of the threat differs significantly. During COVID, Australia benefited from its geographical isolation, allowing for relatively effective border controls. Now, that same isolation presents a challenge, increasing reliance on potentially unstable global supply chains. The situation is further complicated by the recent explosion at a major LNG plant in Qatar, adding to concerns about petrochemical supply – crucial for plastics, construction, fertilizers, and pharmaceuticals. One business leader, speaking anonymously, warned that the public needs to understand “how real this could secure”.

Beyond Petrol: A Broader Supply Chain Risk

The potential ramifications extend far beyond the price at the pump. Australia’s “just-in-time” production model, which minimizes inventory to reduce costs, leaves it particularly vulnerable to supply chain disruptions. The reliance on imports, coupled with the geopolitical instability, creates a precarious situation for numerous industries. The Conversation highlights that the Albanese government is also investigating the conduct of major fuel suppliers in regional Australia, adding another layer of complexity to the issue.

The appointment of a fuel supply coordinator is a step in the right direction, but it’s unlikely to be a quick fix. The coordinator’s role will be to assess supply levels, identify potential bottlenecks, and coordinate responses with industry and state governments. However, the effectiveness of this role will depend on the government’s willingness to proactively address the underlying vulnerabilities in Australia’s supply chains and to communicate transparently with the public about the potential risks.

Opposition Pressure and the Political Landscape

The opposition, led by Angus Taylor, has been largely preoccupied with internal matters, but the escalating fuel crisis is likely to shift the political focus. Some within the Liberal party are pushing for a more aggressive stance, seeking to capitalize on public anxieties and challenge the government’s handling of the situation. Labor, having previously criticized Scott Morrison’s pandemic response and his “I don’t hold a hose moment” during the 2019-20 bushfires, will be keen to avoid similar accusations of inaction or complacency. Albanese himself, in a past address to the National Press Club, criticized Morrison for failing to prioritize sovereign capability, stating, “Failing to plan is a plan to fail”.

What’s Next: A Watchlist for Supply and Response

The coming weeks will be critical. Shipments booked before the recent escalation in the Middle East will likely be the last to arrive without disruption. As those shipments dwindle, the pressure on supply will increase, and the government’s response will be put to the test. Key areas to watch include:

  • The Strait of Hormuz: Any further disruptions to oil flows through this critical waterway will exacerbate the situation.
  • International Diplomacy: Efforts to de-escalate tensions in the Middle East will be crucial in stabilizing global energy markets.
  • Domestic Fuel Reserves: Australia’s strategic fuel reserves will be closely monitored to assess their adequacy in the event of prolonged disruptions.
  • ACCC Investigation: The outcome of the ACCC’s investigation into fuel supplier conduct in regional Australia could shed light on potential market manipulation or anti-competitive practices.
  • Government Communication: Clear and transparent communication from the government will be essential in managing public expectations and preventing panic.

The Albanese government’s steady-as-she-goes approach may have served it well in the past, but the current crisis demands a more proactive and comprehensive response. The stakes are high, not just for consumers at the petrol pump, but for the broader Australian economy. The situation requires a shift from reassurance to robust planning and a willingness to confront the vulnerabilities that have been exposed by this latest geopolitical shock. Sky News Australia reports on the appointment of a national fuel supply coordinator, but the long-term implications remain uncertain.