The global economy and energy markets are tightly interconnected, and now with the closure of the Strait of Hormuz we are all bracing for impact.
Because when oil is scarce, the fallout hits far beyond petrol pumps.
A global domino effect
What it costs to fill up your car right now is just the tip of the oil crisis iceberg. The Gulf is not just a petrol pump. It is the gate for fertiliser, petrochemicals, aluminium, helium, and refined fuels.
Every day the strait remains shut, a chain of industrial dominoes topples across continents.
Asian refineries – where we buy our petrol – are built to process the Gulf’s heavy, high-sulphur crude and are now struggling to adapt to lighter alternatives being sourced elsewhere.
This is affecting the supply of diesel and jet fuel — the two products in shortest supply. Processing cuts of 5 to 15 per cent have hit refiners in China, India, Japan and Thailand, with China suspending all refined product exports entirely.
Then there’s the chemistry problem.
Medicines, technology, food …
The Gulf accounts for 45 per cent of global seaborne naphtha flows and 23–30 per cent of exports of key plastic inputs, including styrene and polyethylene. As a result, several Asian manufacturers have halted production.
The active compounds in most pharmaceuticals, from aspirin to antibiotics, require petrochemical feedstocks that China and India source heavily from the region.
Qatar’s Ras Laffan complex, shut since an Iranian drone strike, also produced roughly a third of the world’s helium – a gas essential for cooling the super magnets in semiconductor fabrication that power the world’s data centres. There are no ready substitutes.
And then there’s the impact on food. The United Nations estimates that a third of global seaborne fertiliser trade passes through the Strait of Hormuz. Since the war began, urea prices have risen 35 per cent and sulphur is up 40 per cent. With spring planting imminent across the northern hemisphere, farmers face a horrible financial conundrum: pay vastly more for inputs, reduce application rates, or plant less maize and wheat.
The poorest countries are absorbing the worst of it. In Nepal, cooking gas is being rationed. In Sri Lanka, firms have been told to shut on Wednesdays. In Pakistan, schools have closed and universities have moved online.
When will we recover?
Even if the war ended this week, experts say it would take months for energy markets to regain some semblance of normality. Production restarts take weeks, Qatar’s damaged liquefaction units require three to five years of repairs, and the global tanker fleet is in the wrong ocean. War-risk insurance has been cancelled across the Gulf, and insurers are unlikely to reprice quickly. Fertiliser that arrives weeks late cannot be used for the 2026 harvest.
As a net energy exporter, the United States is insulated from the worst excesses of an oil crisis, compared to many allies and trading partners in Europe and Asia.
Diesel prices hit our farmers
While global markets reel, diesel prices are starting to hurt Aussie farmers particularly hard.
Unlike petrol, diesel has no retail price cycle – it moves immediately with international benchmarks. With around 90 per cent of Australia’s supply imported, there is no domestic buffer.
The international benchmark price for refined diesel has more than doubled, up 109 per cent according to the ACCC.
And regional Australia is carrying the full weight of that.
According to Ray White’s head of research, Vanessa Ryder, for a grain farmer running a 900-hectare operation through seeding, or a beef producer moving cattle across multiple properties, the cost of diesel is not just a line item – it is the difference between a viable season and one that isn’t.
Fuel wholesalers have suspended spot-market sales, prioritising contracted customers and leaving smaller, regional operators to manage the limited supply they have on hand.
The wholesale picture underscores the structural nature of the problem. The national average diesel wholesale price over the past twelve months was 168.5 cents per litre; it is now 300 cents. That is not a spike that just gets absorbed quietly at the farm gate.
Reports of diesel theft from farm machinery and storage tanks have risen sharply across Victoria, NSW and Western Australia, a sign of how acute conditions have become on the ground.
While farmers can access the fuel tax credit scheme t offset some excise costs, that mechanism provides no relief against the underlying international price movement.
The downstream effects will take time to fully show, but the direction is clear. Higher operating costs for broadacre cropping, livestock transport, and freight feed through to food prices.
The farm diesel crisis is not a story that stays on the land. It ends up in the weekly grocery bill.
Black gold
The Strait of Hormuz crisis shows us just how fragile global supply chains are and also how reliant we are on oil.
The effects of a shortage on energy, agriculture, manufacturing and more is enormous and contagious in the way it disrupts. The cost of oil is never just the price at the pump.
And right now, it’s liquid gold.
