The US-Iran war has disrupted key oil supply routes, making shipping not only more costly but also dampening sentiment in the transport industry. Even the top transport and logistics companies are receiving fewer freight enquiries, while diesel and petrol bills are rising.
Enquiries for freight movements out of Melbourne and Brisbane, two of the busiest transport corridors, have seen a noticeable slump. War's consequences for the global supply chain are evident in slumping demand and higher freight costs due to increased fuel prices.
An Overview of the War and its Effect on Gasoline Prices
The current conflict escalated on 28 February 2026, when US and Israeli forces launched coordinated strikes on Iranian targets. Iran, which witnessed the death of its supreme leader, retaliated hard against them by attacking Gulf neighbours harbouring US bases with heavy missile bombardment. Its biggest retaliation was the unilateral imposition of restrictions on commercial shipping through the Strait of Hormuz.
The Strait of Hormuz is the world's most critical energy supply route, with over 20 million barrels of oil passing through it per day. That's roughly one-fifth of global petroleum & LNG consumption. Iran used its strategic geographical advantage to choke the Strait of Hormuz.
The scale of disruption is unprecedented, as per the IEA. It surpasses the Russian-Ukraine war energy shock.
Major Gulf producers cut output almost immediately due to war-led damage and threats. (Source)
For instance:
- Iraq's southern field production dropped roughly 70%, from 4.3 million to 1.3 million barrels per day.
- While Kuwait declared force majeure on crude shipments and the UAE and Saudi Arabia scaled back production.
- Global oil stockpiles are being used up at record rates. Countries such as China & India are using their reserve stockpiles.
Currently, the situation is unpredictable. The ceasefire also didn't materialize for long, and the war has resumed. The fragile truce signed with the MoU has broken down. We are witnessing fresh strikes from both sides. The strait's shipping traffic is well below pre-war levels, and oil markets are on edge.
Australia's current fuel output is nowhere near enough to insulate itself from an oil shock like this. Oil markets are showing extreme volatility. Brent crude hit an intraday high of $119.50 a barrel. Currently, the prices are somewhere near $82 per barrel (Date: 29 July, 2026). While the prices have dropped significantly, they are still very high than the pre-war levels of $68. The main effect is the sentiment and supply chain woes. With no clear war solution, oil markets are clueless. Australia is also dependent on the Hormuz-linked supply.
Since the conflict began, Australian oil prices have jumped to their highest level since March 2026 (live source). Pump prices for diesel are now sitting between $2.2 and $2.5+ per litre in many parts of the country, surging more than 50%.
The disruption to supply will be particularly acute for Australia, given the reliance on imported diesel. 90% of diesel is imported into the country.
Tom Allen,
Head of energy and utilities research at UBS
By May, Australia's national reserves stood at roughly 46 days of petrol and about 33 days of diesel. While efforts from the federal government to cut excise may offer temporary relief, the structural problem needs a permanent fix.
The current Habshan-Fujairah pipeline, which is a crucial export route for the UAE, has an operating capacity of 1.8 million barrels per day. The efforts are underway to increase the existing capacity to 3.6 million barrels per day. These targets can be achieved by 2027; however, currently, the situation is grave in the Middle East owing to the dependency on the Strait of Hormuz.
How Higher Fuel Prices Hit Transport Services in Australia?
Fuel makes up roughly 21 to 35% of total operating costs for a trucking business. That number used to feel stable. Not anymore. The price for freight has increased in a proportional manner, and the burden is passed to the end consumer in the supply chain. However, freight transport companies are not immune to the situation. In many cases, it is not possible to pass down the complete cost to the end consumer. In cases of Contract-based consumers, regular clients, and B2Bs, the cost burden is mostly divided between freight services and the consumers.
Another major issue is the availability of freight jobs. As price pressure increases and the supply routes remain disrupted, freight is not moving as it should. The volume has shrunk. Even cities such as Melbourne and Brisbane (that sit on one of Australia's heaviest freight corridors) are facing the demand slump.
- Trucking companies operating between these two cities report fewer freight bookings. Businesses are delaying shipments.
- Some are consolidating loads to cut the number of trips.
- Others are shifting bigger freight to rail, where possible, to dodge diesel exposure altogether.
The overall sentiment in the transport services industry is pessimistic
The higher fuel prices, along with previous issues such as driver shortages, compliance worries, etc., are dampening the sentiment in the transport services industry, especially for the small freight operators. Freight companies are facing losses or coping with lower profits.
The effects are felt across multiple aspects:
- Fleet upgrades are paused.
- Contracts are renegotiated.
- Hiring is below expectation levels.
- Revenue issues and payment woes.
- Margins are bleeding.
What Transport Businesses Can Do Right Now?
The Iran-US conflict hasn't just disrupted oil markets. It has reached into Australian freight businesses, warehouses, and packaging services. Waiting for the war to end isn't a strategy. Smart operators can adjust now.
A few practical steps can help fleets manage the shock:
- Route optimisation – Cutting unnecessary kilometres lowers fuel burn directly.
- Load consolidation – Fuller trucks mean fewer trips for the same freight volume.
- LTL partnerships – Sharing loads with other shippers spreads fuel costs across more cargo.
- Diversifying freight modes – Shifting eligible freight to rail reduces diesel dependency where corridors allow it.
None of these fixes remove the underlying problem. But together, they help operators survive the extreme volatility. Until shipping through the Strait of Hormuz stabilises, Australia's transport sector will keep operating in a high-cost, low-certainty environment.
Note: We will update the article as soon as the situation changes.
If your business is feeling the pinch from rising freight costs or shipping delays linked to the current global situation, get in touch with the Soldrift team. We're here to help you find the most cost-effective, reliable way to keep your goods moving.
Jade Williams
CEO & COO at Soldrift
Leading our team with a focus on growth and operational excellence.