SYDNEY — Australia's ongoing fuel crisis, triggered by the US-Iran conflict and disruptions in the Strait of Hormuz, entered a critical phase this week as diesel shortages continued to threaten supply chains despite government interventions announced in the 2026-27 federal budget. With petrol prices easing slightly but diesel remaining elevated and hundreds of service stations still reporting outages, motorists and businesses face prolonged uncertainty amid efforts to bolster national reserves.

The crisis stems from a sharp reduction in global oil supply following the closure of key shipping routes in the Middle East. Australia, which imports more than 90 percent of its refined fuel, has been particularly vulnerable due to decades of declining domestic refining capacity. Only two major refineries remain operational — Ampol's Lytton in Brisbane and Viva Energy's Geelong facility — covering less than 20 percent of national demand.

As of mid-May, the government reports improved reserve levels compared to early March, with roughly 44-46 days of petrol, around 33 days of diesel and 30 days of jet fuel on hand. However, experts warn that the full impact of disrupted shipments is still working through the system, creating a "long tail" of potential shortages and price pressure.

Budget Response and Fuel Resilience Package

Treasurer Jim Chalmers' budget, delivered Tuesday, allocated significant resources to address the crisis. A $10-14.8 billion fuel security and........

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