The biggest trigger is the bombing of Saudi Arabia\u2019s crucial East-West pipeline<\/a>. The pipeline acted as a release valve for Saudi exports blocked from passing through the Strait of Hormuz.<\/p>\n Fuel prices are spiking. Unrest has quickly followed, with riots and protests<\/a> from Syria to Portugal to Guatemala. Global oil stocks have fallen by 507 million barrels<\/a> since the US-Iran war broke out in February as nations eat into their reserves.<\/p>\n But prices could have been a lot higher if it wasn\u2019t for China. Demand in the world\u2019s largest oil-consuming nation is set to fall<\/a> for the third successive year. Earlier stockpiling and a rapid shift to electric vehicles are responsible.<\/p>\n Fewer routes for Gulf oil<\/p>\n The year\u2019s first fuel crisis came after Iran blocked the vital Strait of Hormuz, disrupting shipments from nations such as Kuwait, Saudi Arabia and Qatar.<\/p>\n The new crisis may be different because it affects Saudi Arabia\u2019s most important<\/a> alternative export route \u2013 the 1,200km pipeline linking eastern oilfields to the Red Sea. It was built in the 1980s as a way to bypass Hormuz.<\/p>\n A series of drone strikes<\/a> from September 10\u201311 damaged pumping stations, forcing the Saudi oil company, Aramco, to shut the pipeline as a precautionary measure<\/a>. Aramco has reportedly told European refiners they will receive no crude oil<\/a> next month.<\/p>\n Drone strikes damaged pumping stations on Saudi Arabia\u2019s East-West oil pipeline. Maxar\/Getty<\/a>.<\/p>\n Hormuz remains a bottleneck. Oil tankers and commodity vessel numbers remain low<\/a>. Before the war, the passage carried a fifth of the world\u2019s oil and gas.<\/p>\n Producers have not been caught unprepared. Oil traders are increasingly using the Omani port of Sohar as a partial workaround, as the port sits outside the narrowest Hormuz choke point. Aramco will use Sohar to ship roughly 60 million barrels<\/a> over September and October.<\/p>\n My analysis of vessel-tracking data from the London Stock Exchange Group shows China-bound crude oil shipments from Sohar rose more than tenfold between February and August.<\/p>\n Refined fuels such as diesel are also facing shortages due to the Russia-Ukraine war.<\/p>\n Ukraine is increasingly targeting Russian oil refineries, striking at least 21 times in August alone<\/a>. Many are offline. Russian petrol production is down 20% and diesel almost 30% from a year ago<\/a>.<\/p>\n China is buying less oil \u2013 and cutting demand<\/p>\n Prices could have gone much higher this year if China hadn\u2019t stopped buying oil<\/a>. China was arguably the country most exposed to the crisis, relying on the Middle East for about half<\/a> of its oil imports. Yet instead of competing in the market, it drew on its vast stockpiles of oil accumulated before<\/a> the war broke out.<\/p>\n Oil market disruption in the Middle East removed about five million barrels a day from the market. But expert estimates<\/a> suggest China cut its imports by up to four million barrels a day.<\/p>\n China\u2019s role goes beyond buying. Beijing reportedly asked Tehran<\/a> to stop further attacks on Saudi infrastructure. Beijing has leverage, as Chinese buyers took more than 80% of Iran\u2019s seaborne exports in 2025.<\/p>\n Chinese leaders have long seen oil dependence as a vulnerability<\/a>. To wean off foreign oil, leaders bet heavily<\/a> on electric vehicles. Almost two-thirds of new cars sold in China<\/a> are now battery-electric or hybrids.<\/p>\n Chinese refining giant Sinopec forecasts<\/a> demand will fall 3.9% in 2026. China\u2019s oil consumption may have peaked<\/a> in 2025.<\/p>\n Declining demand isn\u2019t a wartime blip. China\u2019s economy grew about 20% between 2021 and 2025, while transport fuel use stayed flat due to a rapid shift<\/a> to electric cars, high-speed rail and trucks running on natural gas or, increasingly, batteries<\/a>.<\/p>\n China\u2019s shrinking appetite and the Gulf state success at re-routing their exports are keeping a cap on oil prices. But this could change.<\/p>\n There\u2019s great uncertainty about what the future holds. RBC Capital Markets warns<\/a> Brent could pass US$120 by year\u2019s end, while Goldman Sachs forecasts prices around US$55 a barrel by late 2027.<\/p>\n \u00a0How could Australia learn from this?<\/p>\n For Australia, the new Middle East crisis is yet another warning about dependency on imported fuel \u2013 especially diesel.<\/p>\n Import-dependent Australia remains highly exposed, as experts have warned<\/a>. Diesel is already approaching A$3 a litre in some areas<\/a>. While passenger vehicles are electrifying<\/a>, trucks, mining and farming machinery remain overwhelmingly dependent on diesel.<\/p>\n As of September 9, petrol in Australia\u2019s five largest cities cost 39 cents a litre more<\/a> than before the Iran war and diesel 77 cents higher. Analysts warn fuel prices are likely to increase<\/a> another 20 to 30 cents a litre.<\/p>\n The government\u2019s plan to boost diesel reserves<\/a> should help in the short term, though more storage capacity closer to major regional users will be necessary.<\/p>\n But the end goal has to be reducing dependence on diesel. Fuel storage buys us time to make that possible.<\/p>\n Longer term, Australia should look to China\u2019s pragmatic approach. China is electrifying transport wherever practical to cut demand for fuel. Where impractical, China is increasingly turning to natural gas.<\/p>\n This approach could work in Australia, one of the world\u2019s largest exporters of liquefied natural gas. Gas could replace diesel for long-distance freight, mining and remote power generation. Over time, electric options will emerge for some of these \u2013 but gas will likely still have a role. *Lurion De Mello<\/a>, Senior Lecturer in Finance, Macquarie University<\/a>.<\/p>\n This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"By Lurion De Mello* Oil markets are in turmoil amid renewed tensions in the Middle East. Prices have…\n","protected":false},"author":2,"featured_media":607810,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-607809","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/607809","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=607809"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/607809\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/607810"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=607809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=607809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=607809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"satellite](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/09\/file-20260921-50-v3zqko.jpg\")
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