Asia is finding a way around the fuel crisis — but Australians are still paying the price

China is releasing more refined fuel, Saudi Arabia is improvising new export routes and Asian buyers are securing supplies. The global oil system is beginning to adapt to the disruption around the Strait of Hormuz — but Australian motorists are still confronting the consequences at the bowser.

There is finally some evidence that the world's fuel supply system is learning to live with a Strait of Hormuz that cannot be relied upon.

It does not mean the crisis is over.

It does not mean oil is again moving normally through the Persian Gulf.

And it certainly does not mean Australian petrol and diesel prices are about to return to where they were before the Iran conflict.

But something important is changing.

Producers, refiners and governments are increasingly finding ways to move oil and refined fuel around the disruption rather than waiting for the Strait of Hormuz to return to normal.

For Australia, that may ultimately prove more important than the daily movement in the Brent crude price.

China opens the fuel tap

The clearest new development comes from China.

Chinese customs data show exports of refined petroleum products rose 12.7 per cent in August compared with a year earlier, reaching 6.01 million tonnes.

Diesel exports increased 42.1 per cent to 1.33 million tonnes, their highest monthly level since March 2024.

Jet fuel exports reached a monthly record of 2.55 million tonnes, up 41.4 per cent from a year earlier.

That is significant because China had restricted exports of diesel, petrol and aviation fuel earlier in the Iran conflict as Beijing sought to protect its own domestic supplies.

Those restrictions began easing in July.

The August figures show the result.

China is again putting substantial quantities of finished fuel into the international market.

That matters to Australia.

Australia's exposure to Hormuz has always been more complicated than the amount of fuel it buys directly from the Middle East.

Government analysis released under freedom-of-information laws showed that Australia imported only small proportions of its crude and refined petroleum directly from Middle Eastern countries in 2024-25.

But Australia relies heavily on refineries in countries including Singapore, South Korea, Malaysia, Taiwan, China and Japan — economies that themselves depend substantially upon Middle Eastern crude.

Our exposure therefore travels through Asia.

So can some of the solution.

Saudi Arabia is improvising

Saudi Arabia is also finding ways to get more oil into the Asian market.

Saudi Aramco has sold about 60 million barrels of crude for September and October that will leave its Ras Tanura facilities inside the Gulf before being transferred between ships near Sohar in Oman.

The operation is expected to move roughly one million to 1.5 million barrels a day.

Chinese and South Korean refiners are among the principal buyers, with cargoes also heading towards India and Japan.

It is an extraordinary workaround.

Oil must still make the dangerous journey through Hormuz, but Saudi Arabia can move it beyond the chokepoint and transfer it outside the Gulf.

Japan's petroleum industry says its refiners have secured sufficient crude through November, partly because of these arrangements.

The system is adapting.

But adaptation is not the same thing as normality.

Supertanker freight rates on some Gulf-to-Asia routes have reached record levels. Every additional transfer, insurance premium, tanker charter and logistical complication adds cost.

The oil can move.

Moving it is simply more difficult and expensive.

Australia is still paying

That distinction is visible at Australian service stations.

The ACCC's latest weekly fuel monitoring report, published on September 18, says average retail petrol and diesel prices increased across Australia during the previous week as higher international refined-fuel benchmark prices flowed through from the renewed Middle East escalation.

Current station-report data put the national average for regular unleaded petrol at about $2.34 a litre and diesel at about $2.78 a litre early on September 19. Prices vary substantially between locations and individual service stations.

Diesel is particularly important.

Its price is not confined to motorists.

Diesel moves Australia's trucks. It powers agricultural machinery, mining equipment and construction machinery.

When diesel becomes expensive, transportation becomes expensive.

When transportation becomes expensive, some of that cost eventually appears in the price of the things being transported.

That is how an oil crisis thousands of kilometres from Australia can become an Australian cost-of-living problem.

Australia has fuel

There is an important distinction between fuel security and fuel affordability.

Energy Minister Chris Bowen said on September 12 that Australia had about 41 days of petrol supplies, 32 days of diesel and 30 days of jet fuel.

He also said 41 ships were travelling towards Australia carrying fuel, with 3.3 billion litres contracted for delivery over the following four weeks.

Those numbers indicate that Australia is not presently confronting the simple scenario many feared at the beginning of the conflict: service stations running dry because tankers could no longer reach us.

Instead, Australia is confronting something more subtle.

Fuel can remain available while becoming painfully expensive.

The oil market is routing around the problem

This is perhaps the most important development.

Markets do not simply stop functioning when infrastructure fails.

They search for alternatives.

Saudi Arabia moves crude to Oman.

China releases more refined fuel.

Refiners seek different grades of crude.

Tankers travel different routes.

Cargoes are transferred between ships.

Inventories are drawn down.

Other refineries increase production when high margins make doing so profitable.

None of these measures repairs the Strait of Hormuz.

Collectively, however, they can reduce the economic power of its disruption.

That is how commodity markets respond to shortages.

High prices initially hurt consumers, but those same high prices create enormous incentives for producers, traders and refiners to find another barrel.

There is still a major vulnerability

Australia should not mistake adaptation for resolution.

The Strait of Hormuz remains one of the world's most important energy arteries.

Saudi Arabia's alternative East-West Pipeline has itself been attacked.

Shipping through the Red Sea has faced its own security problems.

And the improvised supply arrangements now emerging are considerably more expensive than the petroleum system that existed before the conflict.

The crisis has demonstrated another Australian vulnerability.

Australia may be geographically distant from the Persian Gulf, but our fuel market is embedded deeply within the Asian refining system.

We do not have to buy a tanker of fuel directly from Iran, Saudi Arabia or the United Arab Emirates to be affected by what happens in Hormuz.

If the refinery supplying Australia pays more for crude, more for shipping, more for insurance or more for replacement cargoes, Australia eventually encounters that cost.

The next question is price

For months, the central question was whether enough oil and fuel could continue moving.

Increasingly, the answer appears to be yes — although at considerable cost and risk.

The next question is how quickly increased Chinese exports, Saudi workarounds and other adjustments can bring Asian refined-fuel prices down.

That will matter more to Australian motorists than whether Brent crude moves a dollar higher or lower on any particular trading day.

The international petroleum system is beginning to demonstrate something important.

Hormuz does not necessarily have to return to normal for the fuel market to recover.

Enough alternative supply, alternative routes and additional refining capacity can progressively reduce the power of the chokepoint.

But there is an equally important qualification.

The world may be finding a way around Hormuz.

Australia is still paying for the detour.

The Times View

The latest developments provide the first credible reason for cautious optimism about Australia's fuel outlook in some time.

China is increasing refined-fuel exports. Saudi Arabia is getting more crude into the Asian market through unconventional arrangements. Asian refiners are securing replacement supplies.

These are not signs that the Iran conflict has been resolved.

They are signs that the global energy system is adapting to it.

For Australia, that distinction matters.

Our immediate risk is increasingly not that there will be no fuel, but that the fuel reaching us carries the accumulated cost of war, disrupted shipping, scarce refining capacity, expensive freight and geopolitical risk.

The next stage of this crisis may therefore be measured less by the number of tankers passing through Hormuz and more by something Australians can see much closer to home: how long it takes for the price at the bowser to come back down.