Australia explores building its first refinery in 60 years to reduce energy import dependence amid US-Iran tensions
Executive summary: Australia is studying the construction of its first oil refinery in six decades to counter the impact of the war between the US and Iran on its energy imports. The move reflects growing alarm over Australia’s reliance on imported energy — nearly 80% of supply — and seeks to mitigate risks from Middle East instability that could disrupt fuel flows.
Who is involved: Australian government and energy policymakers, with potential involvement from domestic and international energy firms; the US and Iran are key external actors influencing the context.
Likely next: Feasibility studies will proceed, potentially followed by stakeholder consultations and funding assessments, though no timeline for construction has been set.
Australia's exploration of building its first domestic oil refinery in six decades reflects a growing strategic reassessment of energy security amid persistent geopolitical volatility in the Middle East. With the country currently importing close to 80% of its refined fuel needs, disruptions stemming from US-Iran tensions — including intermittent military posturing and fluctuating oil output from Iran — have exposed the fragility of its supply chains. While the idea of a new refinery is not new, the current emphasis underscores a shift from viewing energy independence as a long-term aspiration to treating it as a near-term necessity for economic resilience. The move aligns with broader global trends where nations are re-evaluating reliance on distant suppliers, particularly as trade routes face increased risk of disruption. Establishing a domestic refinery would require substantial capital investment, likely spanning several years, and would depend on securing long-term crude supply agreements and navigating complex environmental and regulatory approvals. Critics may question the economic viability given Australia’s declining domestic oil production and the global trend toward decarbonization, but proponents argue that even a modest refining capacity could serve as a strategic buffer during crises. In the near term, the government is expected to commission feasibility studies and engage with potential private partners, though no formal commitments have been made. The outcome will hinge on balancing immediate security concerns with long-term energy transition goals.
What's next — scenarios
Strategic Buffer Implementation (30%)
Increased capital allocation toward domestic energy security infrastructure by private and public sectors.
- Announcement of formal feasibility study with government funding
- Formation of a public-private partnership consortium
Economic Viability Stagnation (50%)
Energy import dependence remains high, leaving fuel prices vulnerable to Middle East volatility.
- High cost of crude imports vs. local refining
- Regulatory delays due to decarbonization commitments
Crisis-Driven Acceleration (20%)
Rapid deployment of modular refining technology to mitigate extreme supply chain disruptions.
- Significant spike in global crude prices
- Physical disruption to major Middle Eastern maritime routes
What to watch
- Australia Department of Industry feasibility report release (next 90 days)
- Middle East geopolitical tension index/conflict escalation (next 30-60 days)
- Australian crude oil production output data (quarterly update)
Timeline
- — Australia estudia construir su primera refinería en seis décadas para aplacar el impacto de la guerra entre EE UU e Irán (El País — Economía)
- — Donald Trump, atrapado entre la escalada y un acuerdo con Irán en las condiciones de Teherán (Expansión)
- — Trump detiene los ataques sobre Irán para dar aire al diálogo y el crudo cede un 5% (Expansión)
- — Trump asegura haber alcanzado "las bases de un acuerdo con Irán" (Expansión)
Analysis — what this means
Likely next events
- Australian government to release preliminary findings on refinery feasibility by end of 2026
- Potential public consultation on environmental and economic impacts in Q1 2027
- Decision on site selection expected mid-2027 if study proceeds
Sectors affected
- Oil refining
- Energy security
- Domestic fuel production
- Import-dependent economies
Regulatory implications
- Environmental approvals required under Australian federal and state laws for new fossil fuel infrastructure
- Possible inclusion in national energy security strategy under the Australian Renewable Energy Agency (ARENA) or Department of Climate Change
Historical parallels
- Australia’s last domestic refinery closure: Mobil’s Altona refinery reduced operations in 2021, marking the end of an era of local refining
- 1970s oil shocks prompted earlier (unfulfilled) calls for Australian refining capacity to counter OPEC supply risks
- 2022 EU refinery investments in response to Russian fuel import bans following Ukraine invasion
Key entities
Sources
- Australia estudia construir su primera refinería en seis décadas para aplacar el impacto de la guerra entre EE UU e Irán — El País — Economía
- Donald Trump, atrapado entre la escalada y un acuerdo con Irán en las condiciones de Teherán — Expansión
- Trump detiene los ataques sobre Irán para dar aire al diálogo y el crudo cede un 5% — Expansión
- Trump asegura haber alcanzado "las bases de un acuerdo con Irán" — Expansión
Related cases
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- The US‑Iran war has already cost the Pentagon roughly $38 billion and could add $2‑3 billion each month while fighting continues
- Spain’s Iran‑war fiscal relief cut 1.812 billion euros from tax receipts by July
- European airlines move slowly toward US‑style consolidation as costly fuel and entry barriers curb competition
- Trump’s Iran threats raise fears of a global saffron shortage, spotlighting Spain’s role as a key processing hub
- U.S. becomes Spain's top aviation kerosene exporter as Iran‑war shortages disrupt traditional supplies