A prolonged war in the Middle East could slash $16.5 billion from Australia's economy, Treasurer Jim Chalmers has warned, as the government convenes emergency meetings to prepare for potential fuel shortages and economic fallout.
The stark warning came as National Cabinet met to discuss Australia's economic resilience in the face of escalating conflict between the United States and Iran, which has already sent oil prices surging.
Chalmers told reporters the conflict could leave "a bigger scar" on the Australian economy than previous oil shocks, given the country's limited fuel reserves and vulnerability to supply chain disruptions.
Mate, here's the uncomfortable truth: Australia is one fuel crisis away from serious economic pain, and we've known this for decades. Now it's happening.
Australia holds just 28 days of fuel reserves - well below the International Energy Agency's recommended 90 days. The country imports most of its refined petroleum from Singapore and South Korea, making it vulnerable to disruptions in shipping lanes that pass through the Strait of Hormuz.
With Iran threatening to close that strait - through which 21% of global oil passes - Australia's supply chain is directly threatened.
The $16.5 billion figure represents the estimated economic impact of sustained high oil prices, reduced trade, and increased costs across every sector of the economy. Transport costs surge. Manufacturing inputs become more expensive. Consumer spending drops as people redirect income to fuel costs.
The Guardian reports that National Cabinet discussed accelerating plans for strategic fuel reserves and potentially rationing if the crisis worsens.
