Australian media warn of fuel supply ‘crunch time’ in coming weeks
Melbourne: As Australia sits at the far end of the regional fuel supply chain, it may face a fuel supply “crunch time” in the coming weeks, according to local media reports, citing the conflict in the Middle East that has driven up international energy prices and exposed Australia’s heavy structural dependence on imported fuel.
The Australian Broadcasting Corporation (ABC) reported that Australia now has only two domestic refineries still operating, while more than 80 per cent of its petrol, diesel, and jet fuel is imported, almost all of it from Asia. ABC added that much of the crude oil used by Asian refiners comes from the Middle East and is mainly shipped through the Strait of Hormuz.
The report also said the global oil market is facing severe supply disruption and that markets still appear to be underestimating the duration and damage of the shock. It noted that even if the Strait of Hormuz reopens, shipping insurance may not recover quickly, meaning the impact on both the global and Australian economies could worsen.
The Australian reported that turmoil in energy markets triggered by the Middle East conflict has already pushed up costs for Australian manufacturers and logistics companies. DHL, a global freight company, said in a letter to customers in Australia that diesel prices in the country rose by 30 to 50 per cent in the second week of the conflict, prompting the company to change its fuel surcharge review cycle from monthly to weekly, Xinhua news agency reported.
Another article in The Australian said soaring oil and gas prices could leave Australian households facing “another expensive winter.” Reserve Bank of Australia Governor Michele Bullock was quoted as saying that higher fuel costs were beginning to seep “into the fibres” of the economy and could further lift inflation expectations.