Australia Fuel Crisis Deepens With Hundreds of Stations Running Dry

SYDNEY — Hundreds of petrol stations across Australia have run out of diesel or unleaded fuel amid a worsening supply crunch triggered by the escalating conflict in the Middle East, prompting the federal government to temporarily lower diesel standards for six months and release emergency reserves to ease shortages.

Energy Minister Chris Bowen told Parliament on Monday that more than 100 stations in Victoria alone had no fuel of at least one grade, while New South Wales reported 164 without diesel and 289 missing at least one type out of more than 2,400 locations. Queensland saw 47 stations out of diesel and 32 without regular unleaded. Similar shortages hit other states, with Victoria recording up to 134 to 160 stations affected in recent days.

The disruptions stem from the U.S.-Israeli military actions against Iran that have severely curtailed oil flows through the Strait of Hormuz, cutting supplies to Asian refineries that provide most of Australia’s imported fuel. Australia imports about 90% of its petrol, diesel and jet fuel, with the vast majority coming via Asian processing hubs. Six fuel shipments bound for Australia were canceled or deferred in recent weeks, exacerbating the strain.

As of mid-March, Australia held roughly 38 days’ worth of petrol, 30 days of diesel and 30 days of jet fuel, according to the latest government figures. Bowen insisted the overall market remains well-supplied at a national level and blamed much of the local shortages on panic buying that has spiked demand by 300% to 400% in some areas. He ruled out immediate rationing but confirmed the government has released about 20% of its strategic fuel reserves — roughly a week’s worth of supply — into the domestic market.

On Tuesday, the government announced it would relax diesel quality standards for six months, allowing higher-sulphur fuel into the system to add nearly 100 million extra litres per month. The move aims to help farmers, truckers and regional communities facing acute shortages. Two remaining domestic refineries are operating at full capacity and have been directed to prioritize Australian supply over exports, with government subsidies to keep them running.

Retail prices have surged sharply. The national average for unleaded 95 petrol rose 18.5 cents to 238 cents per litre in the latest weekly figures, while diesel climbed 36.8 cents to 239.6 cents. Some regional stations reported diesel above $3 per litre, with isolated cases nearing $4. Australia recorded the fastest fuel price increases in the developed world since the conflict began, according to global tracking data.

The crisis has hit key sectors hard. Farmers warned that diesel shortages could delay planting and harvesting, potentially driving up food prices by as much as 50% if prolonged. Trucking operators reported fuel levies rising weekly, with some independent haulers halting operations. Logistics giants like DHL and Australia Post have hiked surcharges significantly, with parcel delivery costs nearly tripling in some cases. Manufacturers spoke of “brutal” price hikes flowing through supply chains.

Panic buying has compounded the problem. Motorists queued for hours at remaining stations, and roadside assistance groups reported a 15% spike in callouts for vehicles running out of fuel. In some rural towns, stations imposed informal limits or sold out entirely by midday. The NRMA in New South Wales noted a surge in stranded drivers.

The government has activated a National Fuel Supply Taskforce and secured interim authorization from the Australian Competition and Consumer Commission allowing major suppliers to coordinate distribution without breaching competition laws. A supply deal with Singapore, one of Australia’s key refined fuel sources, was also inked to stabilize inflows.

An old 2019 national fuel emergency response manual, obtained via freedom of information, revealed contingency plans including a $40 per transaction cap — roughly 16 litres at current prices — that could be imposed only after a formal declaration of a liquid fuel emergency by the Governor-General. Officials stressed no such declaration is imminent and ruled out the $40 limit for now.

Defence analysts expressed concern over Australia’s thin strategic reserves, noting the country has consistently fallen short of the International Energy Agency’s 90-day stockholding obligation. Former senior military figures outlined five short-term options to boost supply, including greater use of domestic oil reserves, accelerated imports from alternative sources and potential military logistics support. A 2025 government war-gaming exercise had already warned of “significant economic impact” from a fuel crisis compounded by other disasters.

Economists warned the crisis could rival the economic shock of the COVID-19 pandemic if oil prices remain elevated and supply chains stay disrupted. Treasurer Jim Chalmers highlighted risks to inflation and growth. Public transport usage has risen as commuters seek alternatives, prompting calls from unions for fare-free services during the crunch.

Prime Minister Anthony Albanese has held talks with the IEA chief and state leaders, urging calm while emphasizing that ships continue to arrive, albeit with some delays. The government has encouraged measures such as working from home where possible, reducing driving speeds and avoiding non-essential air travel to conserve fuel.

Regional areas feel the pain most acutely. In New South Wales and Victoria, farmers and freight operators reported rationing diesel for essential tasks. Some remote communities faced complete outages, forcing residents to travel long distances for fuel.

The Australian Institute of Petroleum and industry groups called for steady consumer behavior to avoid worsening localized shortages. Meanwhile, electric vehicle sales have ticked up at auctions as some drivers seek longer-term alternatives, though high upfront costs limit widespread shifts.

As the Middle East situation evolves, analysts predict the pressure on Asian refineries could intensify in coming weeks, creating a potential “crunch time” for Australia at the end of the supply chain. The International Energy Agency has described the global disruption as potentially worse than the 1973 and 1979 oil shocks combined if the conflict persists.

For now, Bowen and other officials continue to reassure the public that national supply remains adequate until at least mid-April, provided panic buying subsides. Travelers and businesses are advised to fill up early, plan routes carefully and check local station apps or websites for real-time availability.

The crisis has reignited debate over Australia’s fuel security, including calls for greater domestic refining capacity, larger strategic reserves and accelerated transition to alternatives. With prices climbing and stations running dry, the coming weeks will test both government response and public resilience in the face of global energy turmoil.