Any time conflict heats up in the Middle East, there is often talk of the potential impact on Australian fuel prices – with many fearing we will see price hikes or even a lack of supply.
While this could be a real possibility for many countries, the likelihood of oil exports from the Middle East being completely shut off from this part of the world is quite low, with the likelihood of Australia seeing an oil shortage even lower.
A large portion of the world’s oil supply passes through a point between Iran and other countries such as the UAE, Oman, Bahrain, Qatar, and Kuwait, with the main choke point being called the Strait of Hormuz between Oman and Iran.
An attack or blockage of ships passing through here could very well affect oil prices, but blocking the strait would affect Iran’s oil exports as well, which is currently about 4 per cent of global production.
“Well, 20 per cent of the world's oil goes through that Strait of Hormuz. We’ve had conflicts in the past, we've had Russia and Ukraine, and then last year, we had around June, we had Iran and Israel. But, the fact of the matter is over 50 per cent of the oil that comes into Australia comes out of Singapore,” Lee said.
“Oil goes into Singapore from South Korea, Japan, Indonesia, Brunei, Malaysia, so that's where the bulk of our fuel comes from. We’re not going to have a supply impact.
“This isn't toilet rolls during COVID, it's just too early to speculate.”
The only way we will see dramatic rises in petrol prices is if main shipping channels are attacked, thus putting strain on other suppliers, but even then it’s still a competitive market. These oil suppliers outside of the Middle East can ramp up supply and refining while outbidding other suppliers, ensuring a steady supply.
“There’s always speculation around commodities [such as oil]. Even if there is a lack of supply of the Middle East, and not much oil comes to Australia from there, but even if there is, you're likely to see an increase in supply from other producers. I mean, you've got to look at the US, which is now in the top three fuel exporters and oil exporters in the world," Lee said.
Other concerns have arisen about petrol stations using the conflict as an excuse to gouge on price, but Lee said that is unlikely to happen.
“We're dealing with a highly competitive fuel market. When you talk about price gouging, well, if you up your price beyond where the market is, you won't have anyone on your forecourt filling up their tanks," he said.
“People can vote with their wallets. It’s not hard to jump on fuel pricing apps, whether it be RACQ, NRMA, RACV and AA, or even Petrol Spy and all these other apps; it's really easy. Just put in your postcode, and you can find out what the cheaper fuel is in your area.”
Even if oil prices do go up, it will likely take about four weeks for the pricing shock to reach Australian shores, which answers yet another concern of consumers, our petrol reserves.
“[In Australia] we have a minimum stock holding obligation. That's 27 days [worth of petrol] for importers and 32 days for diesel. [Petrol stock] is not an issue," Lee said.
Zane Dobie comes from a background of motorcycle journalism, working for notable titles such as Australian Motorcycle News Magazine, Just Bikes and BikeReview. Despite his fresh age, Zane brings a lifetime of racing and hands-on experience. His passion now resides on four wheels as an avid car collector, restorer, drift car pilot and weekend go-kart racer.
