When oil shocks return: what the US-Iran crisis means for Australia

A sharp escalation in tensions between the United States and Iran has pushed oil prices higher and reminded the world of a familiar vulnerability – when energy supply is disrupted, the economic consequences are felt quickly and widely.

For Australia, this is not just a distant geopolitical story – it’s a cost-of-living shock, a business shock and a policy test all at once.

Australia’s petrol prices are often viewed through a domestic lens – taxes, retail margins and local competition. Yet in reality, they are tightly bound to global oil markets. During a major geopolitical disruption, such as the current US-Iran conflict, the economics of Australian fuel prices is best understood as the local transmission of a global supply shock.

This BCEC Policy Briefing Note examines how the current shock compares to previous oil supply disruptions. It examines how this price shock can spread through Australia’s economy and to households, and whether Australian consumers and businesses are facing signs of price gouging by oil suppliers.

It also provides early policy actions Australia can take to stabilise fuel supply, support vulnerable households, and strengthen our longer-term resilience to future shocks.