Oil Prices Plunge Below $95 as US-Iran Ceasefire Sparks Relief

SYDNEY — Australia's fuel crisis, triggered by disruptions in the Strait of Hormuz during the recent U.S.-Israel-Iran conflict, showed tentative signs of stabilization Thursday as a fragile ceasefire took hold, yet motorists face weeks of elevated petrol and diesel prices and lingering shortages at hundreds of service stations nationwide.

The crisis exposed Australia's heavy reliance on imported refined fuel, with more than 80% of its petrol, diesel and jet fuel sourced from Asian refineries that depend on Middle Eastern crude. Iran's effective closure of the strategic waterway — which carries about one-fifth of global oil supplies — sent crude prices surging above $110 per barrel in March, sparking canceled shipments, refinery slowdowns in Asia and empty pumps across rural and regional Australia.

Hundreds of service stations reported running dry of diesel or petrol in recent weeks, with shortages peaking around Easter. As of early April, diesel outages affected roughly 274 to 312 stations nationwide, mostly in remote areas where restocking takes longer. Panic buying exacerbated the situation, prompting Prime Minister Anthony Albanese to urge calm and discourage hoarding.

The federal government responded with a series of measures. It halved the fuel excise tax from April 1 through June 30, cutting about 26 cents per liter off petrol and diesel while suspending the heavy vehicle road user charge. Authorities released portions of the national fuel stockpile — equivalent to several days of supply — in coordination with the International Energy Agency. Fuel quality standards were also under review to broaden the pool of acceptable imports.

Despite these steps, experts warned that Australia, positioned at the far end of global supply chains, would be among the last to benefit from the ceasefire. Crude prices plunged as much as 15% Thursday following the truce announcement, with Brent settling around $96 per barrel, but analysts from Rystad Energy and others said meaningful relief at the bowser might not arrive until mid-May or later. Shipping schedules, refinery restarts and inventory rebuilds create significant lags.

"Australia is at the end of the line," said Kaushal Ramesh of Rystad Energy. "Even with normalized flows, it could take a few weeks at best for reductions to flow through."

The crisis highlighted long-standing vulnerabilities in Australia's energy security. The country produces significant crude oil and liquefied natural gas but exports most of it while importing the vast majority of its refined products. Domestic refining capacity has shrunk dramatically — only two major refineries remain operational in Queensland and Victoria, covering less than 20% of demand. This leaves the nation exposed when Asian suppliers prioritize domestic needs or face feedstock shortages.

Shipments to Australia faced repeated disruptions. At least six fuel cargoes were canceled or deferred in March, and analysts projected more delays as Asian refineries grappled with reduced crude inflows. A "supply cliff" was widely anticipated around mid-to-late April, when pre-crisis inventories at those facilities would deplete. More than 50 ships carrying fuel or crude were reportedly en route to Australian ports by early April, offering some buffer into May.

The government insisted supplies remained adequate, with reserves equating to roughly 36-39 days of petrol, 29-32 days of diesel and similar levels for jet fuel at normal consumption rates — figures that had held or even improved slightly since the conflict began thanks to releases and careful management. Energy Minister Chris Bowen emphasized that legally binding contracts and diversified sourcing provided resilience into May.

Still, the pain has been real for households and businesses. Average petrol prices climbed toward record levels, exceeding $2.30-$2.38 per liter in many areas before the ceasefire-driven drop in crude. A typical motorist using 35 liters weekly saw costs jump from around $60 to nearly $88 before partial relief. Farmers, already in harvest and planting seasons, faced higher diesel expenses at a critical time, with potential ripple effects on food prices and exports.

Businesses reported increased operating costs, reduced travel and supply chain strains. Airlines and logistics firms monitored jet fuel availability closely. The crisis also fueled broader cost-of-living pressures, contributing to forecasts of subdued economic growth and complicating the federal budget due in May.

Politically, the situation drew scrutiny of Australia's energy policies. Critics pointed to the closure of multiple refineries over the past two decades and limited strategic stockpiles compared with other developed nations. Some called for accelerated development of domestic resources, including proposals in Queensland to fast-track outback oil fields. Others advocated greater investment in refining capacity or demand-reduction measures.

The Albanese government defended its response, noting coordination with international partners and a national fuel security plan. Public sentiment, tracked in polls, showed frustration over prices and preparedness, with some blame directed at past policy decisions, oil companies and the global conflict itself.

The ceasefire announced by President Donald Trump brought immediate market relief, easing fears of prolonged blockades. However, the truce remains conditional and short-term, raising questions about sustainability. Tanker traffic through the Strait of Hormuz could take time to normalize fully, and insurance rates or rerouting may keep costs elevated temporarily.

Economists warned that even with falling crude, fuel-related inflation could linger for months, affecting transport, agriculture and manufacturing. AMP deputy chief economist Diana Mousina predicted at least six months of elevated pressures in some scenarios, potentially influencing Reserve Bank decisions on interest rates.

Agriculture and regional communities bore disproportionate impacts. Diesel shortages complicated harvesting and transport, while higher costs threatened profitability for exporters. Tourism operators in remote areas reported booking disruptions from worried travelers.

Looking ahead, the government faces decisions on extending tax relief or implementing further measures if shortages persist. Discussions continue on fuel quality adjustments and potential demand-management strategies. Long-term, the episode has renewed debate about boosting domestic refining, diversifying suppliers and building larger stockpiles to meet International Energy Agency standards.

Australia's experience mirrors vulnerabilities in other import-dependent nations but stands out due to its geographic isolation and heavy reliance on Asian refining hubs. The crisis served as a stark reminder of the interplay between geopolitics, energy security and everyday costs.

As ships continue arriving and the ceasefire holds, authorities expressed cautious optimism that the worst disruptions may be avoided. Yet experts caution against complacency: full recovery will depend on sustained de-escalation in the Middle East and efficient global supply chain readjustment.

For Australian motorists, the message remains one of patience. Prices are expected to ease gradually, but significant drops may not materialize until late May or June. In the meantime, conservation, public transport use and normal refueling habits are encouraged to ease localized pressures.

The episode has prompted soul-searching about Australia's energy future. With the transition to renewables accelerating, liquid fuel security remains a critical bridge. Whether this crisis spurs meaningful investment in resilience or fades as a short-term shock will shape policy debates for years to come.