Potential oil price hike could impact petrol cost in Australia

Sunday, 1 March 2026 17:00

Motorists in Australia are being urged to fill up with fuel before a potential rise in the price of crude oil flows through to the bowser.

The US and Israeli strikes on Iran are raising concerns that retaliations in the Middle East could disrupt the flow of oil, which is heavily dependent on the Strait of Hormuz.

Iran, which controls the waterway, also manages the world's third-largest proven oil reserves.

LIVE UPDATES: Iran's chilling vow of revenge as supreme leader's death confirmed

"The worst-case scenario for the oil market is an attack on Saudi oil infrastructure followed by a complete closure of the Strait of Hormuz," Andy Lipow, president of consulting firm Lipow Oil Associates, told CNN.

"It remains to be seen if Iran will indiscriminately attack oil tankers in the region, shutting the waterway."

Oil prices could increase as much as $USD5 per barrel, if not more on Sunday, warned Lipow.

The waterway, located between the Persian Gulf and the Gulf of Oman, is only 33.7 kilometres wide at its narrowest point.

It's the only way to ship crude from the oil-rich Persian Gulf to the rest of the world. Iran controls its northern side.

About 20 million barrels of oil, about one-fifth of daily global production, flow through the strait every day, according to the US Energy Information Administration (EIA), which called the channel a "critical oil chokepoint".

A closure of the Strait would be particularly detrimental to China and other Asian economies which rely on the crude oil and natural gas shipped through the waterway.

The EIA estimates that 84 per cent of the crude oil and 83 per cent of the liquefied natural gas that moved through the Strait of Hormuz last year went to Asian markets.

China, the largest buyer of Iranian oil, sourced 5.4 million barrels per day through the Strait of Hormuz in the first quarter this year, while India and South Korea imported 2.1 million and 1.7 million barrels per day, respectively, according to the EIA's estimates. In comparison, the US and Europe imported just 400,000 and 500,000 barrels per day, respectively, in the same period, according to the EIA.

- reported with CNN