A conflict in Iran has forced refineries and processing plants to scale back operations, leaving hundreds of tankers of crude oil and LNG stuck in ports in the Persian Gulf and threatening the livelihoods of Australian workers and the affordability of essential goods, according to an ABC report narrated by Fiona Willan. About 20 per cent of the world's oil and natural gas flows through the Strait of Hormuz, but most of it has not been moving, disrupting supply chains that reach construction sites, plumbing businesses, and manufacturers across Australia.
Workers and Small Businesses Bear the Burden
The impact is already being felt by tradespeople and small business owners. Ryan Aquilina, a plumber, said his supplier called last minute to say they didn't have half the order for PVC pipes, which are made with petroleum resin. "Cashflow's a big thing for a small business, I can't absorb 30 per cent increase. I'd have to have real hard conversations with my clients to say this is the price rise coming through and pass on those rates," Aquilina said. Some suppliers are warning their prices are about to climb by around 30 per cent. At construction sites, Nathaniel Smith said, "This has hit on the one material you need before you can pour a slab." Smith, a former NSW Liberal MP who heads the peak body for the industry, added, "It's just another thing that's going to slow our contractors down. This is just another thing that's going to slow down the housing supply."
Vinh Thai of RMIT University said, "Unfortunately, the conflict in the Middle East, in Iran, has had a direct negative impact on the petrochemicals." He also said, "Hundreds of tankers of crude oil and LNG are stuck in the ports in the Persian Gulf and they cannot go to their destination." Thai explained, "Because crude oil and LNG, they're so fundamental to the production of petrochemicals and petrochemicals themselves are so fundamental to other manufacturers' items and therefore there is a chain effect." Asia relies on Middle Eastern exports to produce chemicals needed for global manufacturing, and oil and gas infrastructure has also been damaged in the war.
Dependence on Imports and Vulnerable Supply Chains
Some of the products petrochemicals are used to make include plastics, cosmetics, fertilisers and medicines, and most are manufactured abroad. Vinh Thai said Australia imports around 90 per cent of its medicines from overseas. Suppliers are required to stockpile up to six months' worth of essential medications under rules introduced after COVID, and so far the Therapeutic Good Administration is not expecting shortages. Computer chips in many common electronics are also made with petrochemicals.
Matt Peterson of Harrison Manufacturing said, "We have built an economy and a chemical industry on petrochemicals. We are scrambling to source alternatives to the normal types of raw materials that we would use." Peterson is an industrial chemist at a manufacturing company in Sydney that makes grease and lubricants found in trucks, buses, cars, boats, and other machines around Australia. He said, "The next few months, maybe through the next six months, towards the end of the year, are going to remain a challenging time to source the raw materials."
Push for Domestic Alternatives and Structural Change
For the past few years, scientists at the company have been researching and developing petroleum-free versions of their greases and lubricants using plant-based materials such as vegetable oils. Peterson said, "So, this one you can see this is kind of a nice light tan colour. So that's also containing some of the ester product here. So derived from canola oil." Asked whether the products were all final products or still experiments, he said, "Some of them, we've got one here that is a final product and then the rest are in development." Even using eco-friendly alternatives like canola oil relies on the international market. Peterson said, "For instance, seed oils like canola that are grown in Australia, we currently ship the vast majority overseas. We then import back into Australia refined vegetable oil."
Last year the Federal Government announced a $1.1 billion grants program to encourage businesses to produce alternatives to fossil fuels. Vinh Thai said, "We are on the quest to sustainability, we need to change, however it would take some time, if not decades I would say." The Prime Minister said the immediate priority is getting more fuel into Australia but he is open to finding new ways to produce diesel and petrol here. Anthony Albanese said, "We do not need to wait for this global crisis to be over, to learn its lessons. We can and we must act now to make the most of our resources and make more things here." Until then, Australia remains dependent on others and prices do too, and the standstill in the Strait of Hormuz is not just impacting fuel supply but has also disrupted the production of petrochemicals used to make everyday items.
Why This Matters:
The conflict in Iran exposes how vulnerable Australian workers, small businesses, and households are to global supply shocks driven by petrochemical dependence. When tankers are stuck in the Persian Gulf, plumbers face supply shortages, construction slows, and price increases of up to 30 per cent are passed on to consumers already struggling with cost-of-living pressures. The crisis underscores the need for public investment in domestic manufacturing and alternatives to fossil fuels, as outlined in the Federal Government's $1.1 billion grants program. Australia's reliance on importing 90 per cent of its medicines and shipping domestically grown canola overseas only to import refined oil back highlights structural inefficiencies that leave essential goods and jobs at the mercy of international markets. Building resilience requires not just immediate fuel security but long-term investment in sustainable, locally produced alternatives that protect workers and communities from the instability of global petrochemical supply chains.