Another round of US strikes on Iran under Donald Trump has turned the spotlight back on the Strait of Hormuz and its role in global energy supply.
With oil prices jumping and shipping costs under pressure, Australians are again weighing how the war feeds into our cost of living and economic outlook.
What’s happening in Iran and the Strait of Hormuz
This crisis is centred on the Strait of Hormuz, a narrow shipping lane off Iran that carries a big share of the world’s traded oil and gas. After merchant ships were hit in and around the strait, the US military announced new strikes on Iranian targets and the resumption of a naval blockade on Iranian ports and coastal areas, with explosions reported in cities including Bandar Abbas.
Speaking on Fox News, President Donald Trump said strikes on Iran will continue “until I say it’s enough”. He has also said the US will act as a “guardian” of the strait and impose a 20 per cent toll on cargo that passes through it. Those comments sit alongside earlier moves to reimpose a blockade and tighten sanctions on Iranian oil.
Professor Hussein Dia, a transport expert at Swinburne University of Technology, says this shows a shift in how energy security works.
“Earlier this year, the focus was largely on whether conflict would disrupt oil production or shipping,” he told PEDESTRIAN.TV.
“What is different now is that strategic waterways themselves are becoming part of the geopolitical contest. If major powers begin using access to critical shipping routes as a source of economic leverage, it represents a significant shift. The issue is no longer just who produces the oil, but increasingly who controls the routes that move it. Even the prospect of higher shipping costs or restrictions increases uncertainty, and financial markets respond to that almost immediately.”
How Australia is reacting
Trump’s toll plan has landed badly in Canberra. Shadow Energy Minister Dan Tehan has urged the Albanese government to push back, warning that “freedom of navigation is an essential part of how our international waterways work, and any long‑term strategy or plan which would start to see international waterways tolled would be very alarming”. He said such a move would be “quite a break with tradition” and risk a “dangerous precedent”.
Labor’s Emergency Management Minister Kristy McBain has linked the idea directly to household budgets, warning that if tolls and conflict keep pushing prices up “it is Australian households and consumers who ultimately end up paying the price”, per ABC Radio National Breakfast.
US secretary of state Marco Rubio has previously said “no country is allowed to charge tolls or fees on an international waterway”, but Iran’s foreign minister has praised Trump’s suggestion in principle, arguing that whoever provides safe passage should be compensated and quibbling only over the 20 per cent figure.
What it means for fuel and the Australian economy
For Australians, the immediate worry is petrol prices. When the Iran conflict first drove prices to record highs earlier this year and triggered panic buying, the Albanese government released fuel from reserves and moved to halve the fuel excise for three months to ease pressure on drivers. Since then, it has strengthened strategic fuel reserves, secured extra shipments and introduced new Strategic Reserve powers, while working with regional partners to improve supply.
Professor Dia says those steps, and a lift in electric vehicle uptake, mean the country is better placed now than it was in March.
“Australia is in a stronger position today than it was a few months ago,” he told P.TV.
“The government has strengthened fuel reserves, secured additional fuel shipments, introduced Strategic Reserve powers, and worked closely with regional partners to improve supply resilience. We’ve also seen consumers respond by accelerating the uptake of electric vehicles, which gradually reduces Australia’s long-term reliance on imported oil.”
While his observation is comforting, there’s no denying that oil markets are already twitchy. Brent crude prices have spiked, and the ASX has slipped as traders price in the risk of a prolonged conflict and higher shipping costs.
So what does this mean for petrol prices?
“Oil markets react almost instantly to geopolitical uncertainty, but retail fuel prices usually respond more gradually,” Dia explains.
“Fuel already stored in Australia was purchased days or even weeks earlier, so there is normally a lag before higher wholesale prices reach service stations. That said, if elevated oil prices persist or shipping costs increase, motorists are likely to see higher prices over the coming weeks rather than overnight. It’s also important to remember that uncertainty itself has a price. Markets don’t wait for physical shortages to develop. They begin pricing in risk as soon as tensions escalate.”
He still describes Australia as “structurally exposed”, because we import most of our refined fuels and rely heavily on diesel for freight, farming, mining and construction.
In his view, “fuel security is no longer just about maintaining larger fuel reserves. It is about building a more resilient transport and energy system”, with more electrified transport, charging infrastructure, renewable energy, battery storage and better protection for diesel‑reliant sectors. Will Australia be able to keep up?
Lead image: Getty
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