By Melinda McGee
Published 27 March 2026  |  TherapyInsights 

When the Philippines declared an energy emergency earlier this month in response to the global oil disruption triggered by the war in the Middle East, it was treated as a regional story. In Australia, the government insisted the situation was under control.

Three weeks later, more than 600 service stations across Australia have run dry. Petrol prices have surged past $2 a litre. Six oil tankers scheduled to arrive in April have been cancelled or deferred. The Energy Minister has described the situation as a “national crisis.” And analysts are warning that if the Strait of Hormuz remains effectively closed beyond mid-April, rationing may become unavoidable.

The question is no longer whether Australia is facing a fuel crisis. It is how close the country is to the point at which that crisis triggers a formal national emergency, and what happens to critical services, including healthcare, in the meantime.

The current crisis has its origins in a single geographic bottleneck. The Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula, carries approximately 20 per cent of the world’s seaborne oil and liquefied natural gas supply. When US and Israeli military operations against Iran escalated in late February 2026, Iran retaliated by effectively closing the strait to commercial shipping.

The disruption is unprecedented in scale. The International Energy Agency has described it as the largest supply disruption in the history of the global oil market. Oil prices surged to nearly US$120 per barrel in early March before easing to around US$100, still dramatically above the sub-US$80 levels of late 2025.

Iran’s new leader has vowed to keep the strait closed and drive oil to US$200 per barrel while the military campaign continues. There is no clear timeline for resolution. Diplomatic channels remain active but have not produced results.

This is not a temporary price spike triggered by market speculation. It is a physical disruption to one of the world’s most critical energy supply routes, with no guaranteed end date. For Australia, which imports roughly 90 per cent of its refined fuel, the implications are direct and severe.

Australia entered this crisis in a structurally precarious position. The country has only two operating oil refineries, Ampol’s Lytton facility in Brisbane and Viva Energy’s Geelong refinery in Victoria, down from eight in 2005. Together, they supply less than 20 per cent of national demand. The rest arrives on foreign-flagged vessels from Japan, South Korea, Singapore, Malaysia, and Vietnam.

At the start of 2026, Australia held an estimated 36 days of petrol, 34 days of diesel, and 32 days of jet fuel. This was the largest stockpile in 15 years, but it still fell well short of the 90-day reserve requirement mandated by the IEA, a standard Australia has failed to meet since 2012. Most IEA members hold an average of 140 days.

Panic buying has compounded the physical supply challenge. Demand spiked by up to 50 per cent in some areas as motorists filled tanks and jerry cans. In New South Wales alone, the Premier reported 107 service stations without diesel and 42 completely out of fuel by mid-March. Similar shortages hit regional Queensland, Western Australia, and Victoria, with farmers facing diesel shortfalls critical for machinery and harvest logistics.

The federal government has responded by releasing approximately 800 million litres of petrol and diesel from domestic reserves, temporarily lowering fuel quality standards to allow higher-sulphur fuel into the domestic market, and convening a National Fuel Supply Taskforce. Energy Minister Chris Bowen has said supply is secure until mid-April. But he has also acknowledged that six oil tankers bound for Australia were cancelled or deferred, and that “crisis response actions will need to be considered” if the war continues.

The Lowy Institute described the situation bluntly: the crisis was “entirely predictable and, in fact, comprehensively predicted.”

While public attention has focused on petrol prices and pump queues, the impact on Australia’s healthcare system is receiving far less scrutiny. Yet it is here, in the delivery of disability services, aged care, and hospital operations, that the fuel crisis poses some of its most serious risks. As we have reported, the fuel crisis is already quietly shutting down disability care in parts of regional Australia.

The National Disability Insurance Scheme was designed around in-person service delivery. Therapists, support workers, and care coordinators travel to participants’ homes, schools, and community settings, often across large distances in regional and rural areas. When fuel prices rise sharply or supply becomes unreliable, the economics of that model collapse.

Provider margins under the NDIS are already tight. Fuel cost increases cannot be passed on to participants, and the NDIA’s pricing framework does not adjust dynamically to energy shocks. The result is predictable: providers reduce travel-intensive services, consolidate into metro areas, or exit the market altogether. For participants in regional areas, this translates directly into fewer sessions, longer wait times, and gaps in care.

Home care packages depend on support workers travelling to clients’ homes, often multiple times per week. In a fuel crisis, the cost of those visits rises. For providers operating on thin margins, the calculus shifts: fewer visits, shorter appointments, or withdrawn services.

For older Australians living alone in regional and rural areas, a missed home care visit is not a minor inconvenience. It can mean missed medication, unmonitored health conditions, and increased risk of falls, hospitalisations, or institutional admission.

Hospitals are not immune. Staff commuting costs rise. Supply chain costs for medical equipment, food, and pharmaceuticals increase. Backup generators, which run on diesel, face the same supply constraints affecting the broader market. Ambulance services and patient transport depend entirely on fuel availability.

The pattern is consistent with what we have documented across the healthcare system: patients are skipping care because of fuel costs, and rising costs are compounding pressure on providers and systems that were already stretched before this crisis began.

To understand how close Australia is to a formal emergency declaration, it is useful to map the trajectory of a fuel crisis in four stages.

Australia does not declare a national fuel emergency based on price alone. Prices can double or triple without triggering a formal response. The trigger is functional: a declaration comes when critical services can no longer operate.

The specific conditions that would prompt an emergency include sustained fuel shortages that prevent the operation of essential services, hospitals, ambulances, aged care, and emergency response. Freight and logistics breakdown that threatens food supply and medical distribution. Failure of strategic reserves to maintain minimum supply for priority sectors. Economic destabilisation severe enough to require direct government intervention in fuel markets.

The healthcare dimension is critical. If fuel costs continue to shut down care delivery in regional areas, the functional threshold for emergency measures may be reached well before the headline “reserves” figure hits zero.

This is the gap in the public conversation. The debate is focused on how many days of reserves remain. The more relevant question is how many days of functional service delivery remain.

The trajectory of this crisis depends almost entirely on the duration and scope of the Strait of Hormuz disruption. Three scenarios illustrate the range of outcomes.

Energy Minister Bowen has said supply is secure until mid-April. If that assessment is accurate, the critical window begins in approximately three weeks.

Australia is not yet in a fuel emergency — but it may already be in the phase that comes just before one.

The public conversation about Australia’s fuel crisis has been dominated by pump prices and strategic reserve figures. These metrics matter. But they obscure a more fundamental question: how much strain can the systems that depend on fuel, healthcare, aged care, disability support, freight, agriculture, absorb before they begin to fail?

The evidence suggests some of those systems are already under severe pressure. NDIS providers in regional areas are reducing services. Aged care workers are absorbing fuel costs they cannot recover. Patients are deferring care because they cannot afford to travel. These are not hypothetical risks. They are happening now, at Stage 2, before any formal emergency has been declared.

The structural vulnerabilities that brought Australia to this point, the closure of six of eight refineries, the failure to maintain IEA reserve standards, the dependence on foreign-flagged tankers, are the product of decades of policy inaction. They will not be resolved during this crisis. They will shape its severity.

The real question is no longer whether fuel prices will rise. It is how much strain the system can absorb before intervention becomes unavoidable.

 About the Author

Melinda McGee is a healthcare economics writer specialising in cost pressures, funding models, and system sustainability across NDIS and aged care.