Panic at the Pump: How Fear Is Fuelling Global Oil Shortages

Panic at the pump has become a defining feature of the most recent phase of the Middle East crisis.

With 20% of the world’s oil and gas supply effectively out of circulation, motorists from Sydney to South Asia have been rushing to fill up their cars, often worsening the very shortages they fear.

For energy markets already on edge, the sight of snaking queues and “no fuel” signs is a reminder of how much stockpiling can contribute to crises.

Australians start stockpiling

Right now, Australia offers a textbook example of how a demand shock, not a physical shortfall, can tip a system into chaos. 

Since the outbreak of war involving Iran and the closure of the Strait of Hormuz, prices at the pump have surged, with average petrol jumping from around AU$1.71 to AU$2.38 per litre in just four weeks.

Meanwhile, the price of diesel in Sydney has hit record highs of AU$3.14. Australian politicians say that demand for fuel has shot up 400% in some states, illustrating just how anxious motorists are about the potential of another energy crisis.

Hundreds of petrol stations have reported running out of at least one fuel grade, and stories of truck drivers stranded and small businesses squeezed by costs have dominated headlines down under.

Nevertheless, the government insists that underlying supplies remain “secure”. 

Energy officials say that, for now, the volume of petrol and diesel entering the country is unchanged. If anything, it is slightly higher than usual.

As such, the spike at the forecourt is largely being driven by unusual buying patterns rather than shortages. 

Motorists are filling up more often and topping off half‑full tanks. Others are stockpiling jerry cans in their garages. In fact, some transport companies are instructing their drivers to buy diesel whenever they see it, regardless of need. 

And while the Australian Government insists that its supplies of petrol remain healthy, independent petrol stations have started to feel the pinch, simply because they are not deemed a priority in the allocation systems of fuel majors. This means smaller retailers have run dry, even while branded stations have remained open nearby.

Prime Minister Anthony Albanese discussed the situation at a press conference this week.

"We understand that people are under real pressure and the impact of this war is real," he said. "It's happening across the other side of the world. But in today's interconnected world, it's why we have to engage and we acknowledge that."

The global picture

The same dynamics are playing out in several other regions around the world, though the details differ with local policy and infrastructure. 

In parts of South Asia, for instance, governments have responded to surging demand with formal rationing, putting caps on how many litres motorcycles and cars can purchase in a single visit.

There have also been cases of restrictions on purchases in containers that might be used for hoarding. 

Queues are stretching down the street in several major cities, like Bengaluru, Ahmedabad and Yangon, with consumers trying to get ahead of expected price rises, even as authorities stress that import volumes have not yet fallen significantly.

In Europe, policymakers are watching these scenes closely and trying to get ahead of a similar spiral, though this has not stopped some consumers across the continent. 

With oil prices spiking and refiners facing higher feedstock costs, ministers and motoring organisations in the UK have taken to the airwaves to warn drivers explicitly against panic buying. 

The UK’s Housing Minister Steve Reed encouraged Britons to keep purchasing fuel “as they always have”.

What comes next for policymakers

For policymakers and businesses alike, the lesson from Australia and beyond is that crisis management cannot focus solely on molecules and barrels.

Communication and transparency matter just as much. 

Early, credible reassurance about stocks and shipping, coupled with clear explanations of price movements, can help dampen the instinct to hoard. 

Where appropriate, temporary releases from strategic reserves and targeted relaxation of fuel specifications, as seen in Australia, can buy time and flexibility in the system.

But as the latest queues at the pump show, reducing reliance on refined oil products is also about insulating societies from the psychology of scarcity, not just the geopolitics of supply.