SYDNEY — Australia is grappling with its most severe fuel crisis in decades as disruptions from the U.S.-Iran conflict continue to throttle oil supplies through the Strait of Hormuz, driving up prices, emptying service stations and threatening supply chains for food, transport and farming.

As of early May 2026, national average unleaded petrol prices hover around $1.90 to $2.20 per litre after recent relief, while diesel remains elevated near $2.70 to $3.00 per litre in many areas — still well above pre-crisis levels of around $1.60-$1.80 for petrol and $1.80 for diesel. Hundreds of service stations have reported running dry on diesel or unleaded at various points, sparking panic buying in March and April.

The crisis erupted in late February when escalating hostilities disrupted roughly 20% of global oil shipments through the narrow Strait of Hormuz. Australia, which imports about 90% of its liquid fuel needs, found itself exposed after years of declining domestic refining capacity and reliance on Asian imports.

Government Response and Temporary Relief

The Albanese government has taken aggressive steps to stabilize supplies. Fuel excise was halved by 26.3 cents per litre from April 1, providing immediate relief at the bowser but set to expire at the end of June unless extended. The government has underwritten shipments, secured dozens of tankers carrying billions of litres through May and beyond, and relaxed fuel quality........

© International Business Times