Australia's Fuel Reserves

Australia's fuel vulnerability didn't begin when the first US strikes hit Iran. It began around 2012, when Australia quietly fell below the 90-day oil reserve requirement it had been treaty-bound to meet since joining the IEA in 1979 – and stayed there.

By the time the current crisis started, Australia's reserves sat at around 36 days of petrol, 32-34 days of diesel, and 29-32 days of jet fuel – figures the government has cited as the highest in 15 years. That context matters, but so does what those numbers actually mean. Multiple non-comparable metrics, different inclusions for ships on-route and/or in Australia's exclusive economic zone, and the question of what is continuing to arrive and what has been released since make it surprisingly difficult to pin down the true usable buffer at any given moment. The fact that we can't get a clean number after a crisis has already started is itself part of the story.

Once fuel already in transit is stripped out, the usable buffer may be materially closer to four weeks. The critical reserve appears to be jet fuel. China – which supplied roughly 32 per cent of Australia's jet fuel imports in 2025 – has instructed refiners to halt new fuel export contracts, a move expected to cut Australian supply from April.

The architecture of the problem

For most of Australia's recent history, there was no legal obligation on industry to hold minimum fuel stocks at all. Refineries closed – from a peak of around eight operating facilities in the mid-2000s down to just two today. As refineries closed, supply chains shifted to imported fuel – today Australia imports around 90 per cent of its refined fuel and crude oil, sourced largely from refineries in Singapore, South Korea and Japan. The industry moved toward just-in-time logistics, and storage depots were rationalised.

The IEA obligation sits with the federal government, not industry, and there is no domestic law that actually enforces it. The gap between Australia's position and the 90-day IEA standard wasn't an accident – it was the accumulated result of years of structurally incentivised decisions, each individually defensible, but collectively not in the nation's fuel security interests.

Following the pandemic, the government legislated a Minimum Stockholding Obligation in 2021, which took effect in July 2023. But the MSO was set at only 24-27 days for petrol and jet fuel, and 20-32 days for diesel depending on whether the entity is a refiner or importer. It was never designed to close the IEA gap. It was designed to stop the bleeding – to establish a legal floor below which industry could not fall, even as the strategic buffer above that floor remained essentially non-existent. According to ASPI, Australia has at least 54 days of onshore storage capacity. The gap between that physical capacity and what is actually being held tells you how much of the problem is infrastructure and how much is policy choice. In other words, Australia does not lack the tanks to hold more fuel. It lacks the policy framework that requires those tanks to be filled.

The window that closed

The harder question is not what happened once the latest Iranian conflict started. It's what happened in the months before it.

The geopolitical trajectory was visible well in advance. Iran's 400kg of 60% enriched uranium was likely at least partially moved before the US strikes of June 22, 2025 – a judgment confirmed as live expert opinion by the IAEA's director general and by subsequent US admissions that they could not account for the stockpile. Those strikes didn't end the matter, which is why Trump spent the following months negotiating with Iran specifically over that material. You don't spend months negotiating to eliminate material you already destroyed. A second campaign was the known unfinished business. Analysts were writing about it publicly from late 2025, and Trump's public threats escalated sharply from January 2, 2026 – with explicit warnings on January 13 that "help is on the way" for Iranian protesters. The Strait of Hormuz risk was being discussed openly in security circles, and Australia's fuel vulnerability was already a documented policy weakness.

The window to act was months long and conducted entirely in public. Australia's security assessments would have had this scenario on the board from the moment the June 2025 strikes ended.

The Minister has the power to direct companies to hold stocks above the mandatory minimum. Raising the MSO ahead of a foreseeable crisis was within the government's power. The only real obstacle was cost. Higher stockholding carries a cost that ultimately flows through to fuel prices, and a government already under cost-of-living pressure may have been reluctant to impose that before a crisis that hadn't officially started.

That trade-off is exactly what competent national security management requires: accepting a small visible cost now to avoid a much larger cost later. Every day of additional buffer built in January 2026 would be worth considerably more than the empty space where that buffer should be now.

Whether advice to act was given and ignored, or never given at all, is a question parliament should be asking.

What the MSO cuts actually mean

Once the conflict started, the government's response was to reduce the mandatory stockholding requirement, freeing up supply that had previously been locked in reserve.

The official framing is reasonable as far as it goes. Oil ships are still arriving – perhaps at 80-90% of normal volume – so reducing the MSO frees up fuel that was being held in reserve, buying time for the situation to resolve. If the conflict is short and the Strait reopens soon, which is more likely than not, that's a defensible call.

But there is a harder logic underneath it. Every time the government reduces the MSO to free up supply, it isn't creating fuel. It's reclassifying mandatory reserve as available for sale. If new shipments don't arrive in sufficient volume, the government faces a binary choice: keep cutting the MSO floor to maintain supply at the bowser, or let shortages become visible. Each reduction shrinks the buffer further.

The fact that the government moved to cut the MSO within days of the crisis starting tells you something important: the buffer above the floor – while real – was thin enough that it couldn't absorb even the early stages of a supply disruption without government intervention.

The government is now wagering its only emergency buffer on a geopolitical outcome it cannot influence. If that bet doesn't come in, there isn't an obvious Plan B visible yet.

Watch the floor, not the headline

The government has every incentive to use the most generous metric available, and there are several to choose from. The most important thing to watch going forward is not the headline figure any minister quotes. It is whether the MSO floor keeps getting reduced.

Each cut tells you more about the true state of the buffer than any official statement. Temporary reductions made by the Secretary may not always be immediately visible to the public – which means the information that matters most may be the hardest to obtain.

The current crisis didn't create Australia's fuel vulnerability. It just made it visible.