Iran War Fuel Shock May Outlast Conflict Itself: Australia at Risk

Australia's Iran fuel shock may outlast the war itself, according to a new US energy assessment that indicates part of the disruption to Middle Eastern oil production could persist through the end of 2027.

The immediate problem has been war, restricted shipping, and higher oil prices. However, the longer-term problem may be damaged production capacity, disrupted supply chains, altered shipping patterns, and an international petroleum market that takes considerably longer to recover than the conflict itself.

Australia is heavily dependent on imported petroleum products, with 79% of refined petroleum consumption met by imports in the latest reported annual data. The country's fuel bill may take considerably longer to recover even if the war ends.

The US Energy Information Administration now projects a sustained disruption of approximately 600,000 barrels per day of Middle Eastern crude supply through 2027, according to Reuters. This is down from an estimated 5.5 million barrels per day offline during July, more than 5% of global oil consumption.