THE WASHINGTON POST: Iran war takes heavy toll on Australia, New Zealand as oil soars

The war on Iran is hitting nations in Asia hard, with US partners Australia and New Zealand among those racking up billions of dollars in higher fuel import costs after prices spiked with the closure of the Strait of Hormuz.

Australia imported over A$7 billion ($5 billion) worth of crude oil and processed fuels in June, according to data released Thursday.

That took the value of those imports in the four months since the war began to A$33 billion, more than 70% above the same period in 2025.

But given that the volume of imported petrol, diesel, jet fuel and crude oil only grew 6% over the same period, Australian companies and consumers paid substantially more for basically the same amount of fuel.

While the pain inflicted on Australia and New Zealand has been more manageable than the damage done to poorer parts of Asia, the economic pressures unleashed by the war are spilling over into the labour market and broader inflation.

In New Zealand, another US partner in the region, the price shock since late February helped drive unemployment up to an 11-year high in the second quarter, with the central bank hiking interest rates last month to try and contain inflation.

The country has few local oil and gas reserves and no refinery, and so must import all its liquid fuels.

Since the start of the war, New Zealand’s importers had to pay an extra NZ$1.3 billion ($760 million) for purchases from abroad, according to Bloomberg calculations, compared with what they would have paid had prices stayed the same as in January.

The costs are adding up.

In the first four months since the war began, Australian importers had to pay an extra A$14 billion for imported oil and fuel compared with what they would have paid if prices were the same as in January before the war began, according to Bloomberg calculations.

Australia imports more than 80% of the liquid fuels it uses, meaning the soaring cost of crude oil has translated directly through to higher prices for consumers and businesses.

The government initially stepped in with a temporary tax cut, but that’s now ended.

The jump in prices also convinced the central bank to continue hiking borrowing costs to cool the economy, a double whammy for households who were already facing higher living costs.

While those calculations only go through the end of June, the cost has continued to rise since then, with global oil prices jumping in July after a temporary lull in fighting ended.

Domestic fuel prices in Australia and New Zealand have responded to the latest escalation and started rising again, adding to the costs for consumers and firms.

Oil prices extended gains Friday after a report that Iran attacked “hostile targets” in the Strait of Hormuz, with Tehran seeking to bar US ships from the critical waterway in a deal with Oman.

Brent rose closer to $84 a barrel, well above its $71 level before the war began.

Australian fuel became more expensive for a fifth straight week last week after the government ended the temporary tax cut, while prices at the pump in New Zealand have been elevated since the war began.

The government in Wellington is providing cash handouts to the needy to help them purchase gas but has otherwise done little to ameliorate the effects of higher import prices.

With few signs that a lasting end to the war will happen anytime soon, those costs are set to rise further, putting more pressure on governments and households across the region.

With assistance from Tracy Withers.

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