Expert warns of worsening fuel crisis as global emergency stockpiles near exhaustion

Australia has not yet felt the full impact of the closure of the Strait of Hormuz, with an energy expert warning the fuel crisis is expected to worsen significantly in the coming months.

The warning comes as tensions between Iran and the US continue to escalate, with one person killed and more than 60 injured after Iran struck an airport in Kuwait. Video from the scene showed part of the terminal roof blown open and flames engulfing sections of the building.

WATCH THE VIDEO ABOVE: Iran-US strikes escalate as global fuel crisis looms

John Blackburn, Fellow at the Australian Energy Institute, said Australia is likely to face severe fuel shortages from July and August when emergency stock releases coordinated by the International Energy Agency (IEA) are exhausted.

“What’s happened after the strait was closed, the International Energy Agency organised a release of emergency stocks back into the market. They started doing that in March,” Blackburn said.

“But that release of stocks from the global supply will cease about in the next month, month-and-a-half.”

Blackburn said Australia had been shielded from the worst effects of the crisis so far because of those emergency releases, but warned that would soon change.

“We’re going to get to a stage globally by July where all those spare emergency stocks are gone. And then we’ve got to deal with the reality of that shortage. That’s when it will really start to bite,” he said.

Blackburn said the federal government had worked with industry to support alternative fuel supplies, but warned those measures would not fully offset the impact once global emergency stocks were depleted.

Australia is particularly vulnerable because it relies heavily on fuel refined in Asia, with many of those refineries dependent on oil transported through the Strait of Hormuz.

Even if the vital shipping route were to reopen, Blackburn warned the disruption could continue for years as countries and businesses scramble to rebuild depleted fuel reserves.

As stocks start to flow again, which Blackburn predicts will take several months, demand for fuel will be above the 100 per cent level it was before the war.

“It could be 110 per cent, 120 per cent,” Blackburn said.

“As the whole system comes back online the demand goes above the previous level. This is going to be a problem for the next 12 months. The system itself, to settle down, could take a couple of years.”

Blackburn said a rush by nations to rebuild stockpiles could further intensify shortages.

“If we all just chase to get as much as we can, then we’re actually going to cause even more of a problem right across the world,” he said

At the height of the fuel crisis, experts warned petrol prices in Australia could soar beyond $3 a litre, while some service stations were forced to close temporarily as supplies dwindled.