Petrol prices in Australia are now lower than before the Iran war began. Is the oil crisis over and what happens next?
Fuel suppliers outside the Middle East have proved to be much more flexible than analysts expected – and China surprised everyone Australians were warned soon after the Middle East conflict started that the country could run short on fuel, with prices rising to record levels owing to disrupted oil supplies. Now, amid an uneasy peace deal and continued supply disruptions, petrol prices are lower than they were before the conflict began and official warnings over fuel usage have largely disappeared. Continue reading...
By Jonathan Barrett, Luca Ittimani
How did refiners keep getting oil?
The US-Israel war on Iran closed the strait of Hormuz, through which about a third of the world’s crude oil travelled in 2025. Oil is refined into petrol, diesel and other fuel products.
Without oil, the world was at risk of being unable to produce enough fuel for regular needs. The world’s energy watchdog called for lower highway speeds and increased working from home. The International Monetary Fund warned of global recession.
The investment firm UBS estimates that the closure of the strait has removed about 20.5m barrels a day of oil and products, but workarounds have been found.
Suppliers outside the Middle East have proved to be much more flexible and responsive to demand than analysts expected.
Alternative Middle East pipelines have added 4m barrels a day, stockpile releases have added nearly a further 4m, and China has drastically cut imports, bringing the shortfall down to just 7m barrels a day in May, UBS found.
China’s ability to cut imports by about 4m barrels a day surprised analysts; while it is known to have high inventories it doesn’t publish stockpile data.
Supply chains were also redrawn, with Asian nations importing record quantities of refined fuel from the Americas, while India has taken large deliveries from Russia and Venezuela.
Global oil demand is on course to contract by about 1% this year, the International Energy Agency reported on Wednesday, after the initial high prices and lost supply cut demand.