Europe's latest oil problem might feel a long way from Australia.
But I wouldn't be so quick to ignore it.
Saudi Arabia has been forced to cut some crude shipments to Europe after drone attacks damaged its East-West Pipeline.
That pipeline carries oil from the kingdom's eastern fields to the Red Sea.
The route has become especially important because it allows Saudi crude to bypass the Strait of Hormuz.
However, that backup route has now been shut off.
And while Australia doesn't rely heavily on Saudi oil, we could still end up feeling the impact here.
Image source: Getty Images
Europe is already scrambling
Saudi Aramco has reportedly cancelled some September cargoes to European customers, while others have been delayed.
Polish refiner Orlen responded by securing 16 replacement crude cargoes from suppliers including Norway, Algeria, Kazakhstan, Azerbaijan, and the Americas.
That shows us just how quickly buyers are having to look elsewhere. And the more refiners chasing replacement barrels, the more competition there is for the same supply.
Brent crude is still trading above US$100 per barrel after jumping earlier this week, although prices have pulled back from their recent highs.
One reason is that Saudi Arabia has found another way to move some of its oil.
The kingdom has been offering more crude to Asian refiners through ship-to-ship transfers near Oman, while loadings from Saudi Gulf ports have increased.
Could Australia feel it next?
Yes, but the impact here won't necessarily be fuel shortages.
Australia imports fuel from a number of countries across the Asia-Pacific. Its two remaining refineries in Brisbane and Geelong produced around 20% of the country's annual fuel needs in 2025.
That means Australia isn't in the same position as European refiners trying to replace lost Saudi supply.
The bigger risk for us is price.
Most of our imported refined fuel comes from Asia, while local petrol and diesel prices are heavily influenced by Singapore fuel benchmarks and the Aussie dollar.
So, if higher crude prices push fuel prices up across Asia, Australian motorists could end up paying more at the pump.
And it may not take very long.
The ACCC says changes in international benchmark prices can take around 2 weeks to flow through to fuel prices in Australian cities.
We have some breathing room
Australia does at least have some protection if the situation gets worse.
During the June quarter, our fuel stocks averaged around 44 days of petrol, 36 days of diesel, and 31 days of jet fuel.
The government is also working towards a one-billion-litre strategic fuel reserve, along with higher minimum stockholding requirements.
So, I don't think Australia is about to run out of fuel any time soon.
But if the problems in the Middle East drag on, Australians will end up paying more at the petrol station.
