9 March 2026 – One week after US-Israeli
strikes on Iran triggered the effective closure of the
Strait of Hormuz, the Wise Response Society warns that the
situation has deteriorated significantly since its initial
alert on 3rd March – and that the New Zealand government’s
silence on contingency planning is becoming increasingly
dangerous.
If the New Zealand government has a plan
for rationing fuel, it has not discussed it with the public.
It is the position of the Wise Response Society that it must
do so immediately.
In the nine days since US-Israeli
strikes on Iran triggered the effective closure of the
Strait of Hormuz, the crisis has moved well beyond a
shipping disruption. Force Majeure declarations are now
cascading through the entire supply chain that New Zealand
depends on for 100% of its refined fuel, from Gulf producers
through to the South Korean and Singaporean refineries that
supply our petrol, diesel, and jet fuel. When a supplier
declares Force Majeure, it is legally stating that it cannot
fulfil its contracts. New Zealand may have only two to three
weeks of physical fuel in the country, the pipeline of
future deliveries is being disrupted by Force Majeure, and
the bulk of our stated 90-day reserves consist of untested
paper agreements with overseas governments.
Yet the
New Zealand government has offered no public assessment of
fuel supply risk, no activation of the National Fuel
Security Plan, and no indication that contingency planning
is underway. Countries across the region, from Thailand to
Myanmar to India, have already taken concrete action. New
Zealand has said nothing.
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Wise Response Chair Nathan
Surendran says it is clear the conflict is not going to be
the “four-week process” projected by President
Trump.
“This puts New Zealand in a critical situation
that needs planning, public awareness, and action readiness.
New Zealand is at the end of a very long supply chain and is
more vulnerable than most to supply shocks of this kind. All
of our exporting and importing relies on timely supply of
fuel, and this is about to be seriously disrupted. All of
our productive sector also relies on timely fuel supply, so
this too will be heavily disrupted. The government needs to
be getting its rationing priorities in place now so that
people and businesses can plan for themselves.”
The
conflict is not ending in four weeks
When Wise
Response issued its first press release on this subject last
week, President Trump was projecting a “four-week process.”
One week later, that timeline is looking increasingly
unrealistic.
Analysts at Verisk Maplecroft warn that
the US should “brace for potentially an extended conflict,”
noting that Iran is “a huge country with a huge population”
and a very extensive security apparatus. The Brookings
Institution’s Suzanne Maloney has said the situation is
“going to be more complicated than the White House may have
hoped.” Oxford Economics initially projected one to three
weeks, with a maximum of two months. US war aims have
shifted repeatedly – from destroying Iran’s nuclear
programme, to eliminating its ballistic missile capability,
to unspecified “protection of the American
public.”
Iran’s retaliatory missile rate has declined,
likely reflecting elimination of targets and reduced missile
defence systems interdictions leading to higher success
rates per launch, but the IRGC continues to attack vessels
and maintain its hold on the strait. There is no ceasefire,
no negotiation, and no clear off-ramp. Iran’s security chief
Ali Larijani has explicitly rejected talks with the
US.
Most critically for energy markets, the damage is
becoming structural. On 6 March, Qatar’s Energy Minister
Saad Sherida al-Kaabi warned that if the war continues,
other Gulf energy producers may be forced to halt exports
and declare Force Majeure. Qatar had already stopped gas
production on 2 March and declared Force Majeure on gas
contracts on 4 March. Oil fields across the Gulf have shut
down as a precaution. Oil facilities in Kuwait and Saudi
Arabia have been struck by Iranian missiles. This is no
longer a shipping logistics problem that resolves when the
strait reopens – production infrastructure is being damaged
and taken offline.
Iranian strikes have hit refineries
in at least six countries: Bahrain, Kuwait, Qatar, Saudi
Arabia, the UAE, and Oman. Saudi Aramco’s Ras Tanura
refinery – the kingdom’s largest – has been shut down.
Qatar’s Ras Laffan LNG facility, the biggest in the world,
has been struck. Fuel storage at Oman’s port of Duqm has
been hit by drones. Oil fields in Iraq and Kuwait have been
forced to cut production because Gulf storage is filling up
with nowhere to ship crude. As Rystad Energy’s Amir Zaman
warned this weekend, restarting oilfields that have been
shut in “could take days or weeks or months, depending on
the types of fields, age of the field, the type of shut-in.”
The idea that this crisis ends when the shooting stops is a
dangerous illusion. The physical damage has already been
done, and the supply disruption will outlast the conflict
itself.
This point cannot be overstated: even if
traffic through the Strait of Hormuz were restored tomorrow
– and it will not be – the damage already inflicted on
energy infrastructure across the region would take months to
repair. Additionally, a significant proportion of New
Zealand’s strategic reserve is ‘preferential buy options
on the oil market, and declarations of Force Majeure mean
those options / obligations cannot be met as we describe
below.
New Zealand’s fuel supply chain is under
direct and mounting pressure
The headline oil price –
Brent crude at approximately US$93 per barrel as of Friday’s
close, up over 20% in a single week – understates the
severity of the situation for New Zealand. Goldman Sachs has
warned that prices could exceed US$100 per barrel this week
if no resolution emerges.
But the real story is in
refined products and physical crude markets, which is where
New Zealand’s actual exposure lies. Kpler, a leading
commodity intelligence firm, reports that physical crude
delivered into China is now approaching US$100 per barrel –
well above the paper futures price. Singapore jet fuel
prices have surged approximately 140%. If crude had moved in
proportion to jet fuel, Brent would already be trading
around US$175. The gap between paper and physical markets
reflects a dangerous complacency: financial markets are
still treating this as a temporary disruption, while the
physical supply chain is already in crisis.
The Asian
refineries that supply virtually all of New Zealand’s fuel
are under direct pressure:
- South
Korea, which provides 48% of NZ’s refined fuel
imports, sources approximately 70% of its crude from the
Middle East, with over 95% of that volume transiting the
Strait of Hormuz. South Korea’s four major refiners have
formed a joint task force. Kpler has recommended that South
Korean refineries make proactive run-cut decisions – that
is, reduce output – due to reduced crude supply and
feedstock scheduling
challenges. - Singapore, which
provides 33% of NZ’s refined fuel imports, has no domestic
oil or gas production whatsoever. It is one of Asia’s three
principal refining centres and is reporting reduced output
due to disrupted Middle Eastern crude
supply. - China, which holds roughly
18% of global refining capacity, ordered its largest oil
refineries to halt diesel and petrol exports on 5 March.
India has instructed state-owned enterprises to consider
withholding clean product exports. Thailand suspended crude
and petroleum exports on 1 March. Indonesia is calling force
majeure on some contracts.
As the New Zealand
Energy Substack reported this week: diesel is likely to
tighten before petrol, because Asian refineries are
optimised for the medium sour crudes from the Middle East
that are no longer arriving. They cannot simply substitute
other crude grades and produce the same product mix. Diesel
powers New Zealand’s freight, agriculture, construction, and
fishing fleets. It is the most economically critical fuel we
import.
New Zealand’s fuel reserves – 28 days of
petrol, 24 days of jet fuel, and just 21 days of diesel –
were not designed for this scenario. The diesel reserve is
not scheduled to increase to 28 days until July 2028.
Industry estimates suggest the country typically holds only
two to three weeks of commercial fuel stocks in storage.
Contracted March cargoes are reportedly still in transit,
but unless the situation resolves quickly, April supply is
in serious question.
Force Majeure is cascading
through NZ’s supply chain
The legal term Force
Majeure, meaning an unforeseeable event that prevents a
party from fulfilling a contract, has become the defining
feature of this crisis. In the past week, declarations have
cascaded from Gulf producers through to the Asian refiners
and petrochemical manufacturers that sit directly upstream
of New Zealand.
Gulf
producers:
- QatarEnergy
(Qatar) declared Force Majeure on LNG deliveries around 3-4
March, after halting production at Ras Laffan, the world’s
largest LNG export facility. Qatar’s Energy Minister Saad
Sherida al-Kaabi has warned that all remaining Gulf
exporters are expected to declare Force Majeure within days
if the situation continues, and has predicted oil could hit
US$150 per barrel if the war continues for
weeks. - Kuwait Petroleum Corporation
formally declared Force Majeure on oil and refinery products
around 7 March, citing Iranian threats, attacks on Kuwaiti
territory, and the absence of available
vessels.
New Zealand’s direct supply
chain:
- Yeochun NCC
(South Korea) declared Force Majeure on 4 March on
petrochemical supply, because naphtha feedstock is no longer
available. 54% of South Korea’s naphtha supply normally
transits the Strait of Hormuz. - PCS
(Singapore) declared Force Majeure on 5 March on all
customer shipments. - Aster Chemicals and
Energy (Singapore) declared Force Majeure around 7
March on ethylene and propylene
supplies. - Chandra Asri (Indonesia)
declared Force Majeure on 3 March on all contracts, citing
raw material disruption. - Petronet
LNG (India) issued a Force Majeure notice on 3
March on its Gas Sale and Purchase
Agreement. - Mangalore Refinery and
Petrochemicals (MRPL) (India) declared Force
Majeure around 5 March on all future gasoline export
cargoes. MRPL has also shut its crude unit and secondary
units at its 300,000 barrel-per-day
refinery.
Beyond formal Force Majeure
declarations, production shutdowns are spreading. Iraq is
holding back production as storage fills. The UAE’s ADNOC is
cutting offshore production. Saudi Arabia has shut its
biggest refinery. In China, Zhejiang Petrochemical (backed
by Saudi Aramco) has shut a 200,000 barrel-per-day crude
distillation unit, and Fujian Refining has shut an 80,000
barrel-per-day crude unit. China ordered a halt to new
refined gasoline export contracts on 5 March. Thailand has
halted all fuel exports. Vietnam’s Binh Son Refining has
asked the government to prioritise domestic crude supply and
limit exports through Q3.
The Force Majeure
declarations cascading through our supply chain threaten the
pipeline of future deliveries. When suppliers like those in
South Korea and Singapore declare Force Majeure, it means
the contracted fuel cargoes that New Zealand is relying on
to replenish Tier 1 and Tier 2 stocks may simply not arrive.
Meanwhile, the oil tickets that make up the bulk of the
90-day headline figure have never been tested in a crisis of
this magnitude, and there is no public information on
whether New Zealand could actually draw on them while the
US, UK, and Japan are themselves scrambling for supply.
In a global crisis where those same countries are
simultaneously under fuel supply stress, the practical value
of these tickets is questionable at
best.
Australia is already rationing
fuel. New Zealand is pretending nothing is
happening.
Across the Tasman, the situation has moved
beyond warnings. Australian fuel wholesalers have begun
rationing petrol and diesel supplies to retailers, driven by
a combination of panic buying and tightening wholesale
supply. Queues have formed at service stations in Perth and
Sydney. Petrol prices have jumped from A$1.71 to over A$2.13
per litre.
Professor Allan Fels, former chairman of
the Australian Competition and Consumer Commission, has
warned publicly that if the conflict continues beyond six
weeks, Australia will need to implement formal fuel
rationing – comparing the potential measures to the
rationing seen during the 1973 Arab oil embargo. Australia
holds 36 days of petrol reserves – more than New Zealand –
and its strategic reserves are still non-compliant with
International Energy Agency requirements despite years of
efforts to close the gap.
The Australian Maritime
Union has declared that Australia’s fuel security crisis
“has been laid bare” and called for urgent rebuilding of
sovereign fuel storage and domestic refining capacity. The
Australian Climate Council has warned that the crisis
demonstrates the fundamental vulnerability of economies
still dependent on imported fossil fuels.
New Zealand
has less fuel in reserve than Australia, less domestic
refining capacity (none), and sits further from alternative
supply sources. Yet the New Zealand government has offered
no public assessment of fuel supply risk, no activation of
the Fuel Sector Coordinating Entity, and no indication that
contingency planning is underway.
What Wise Response
is calling for
1. Immediate government transparency
on fuel supply status. The government must tell New
Zealanders exactly how much physical fuel is currently in
tanks onshore, how much is aboard tankers in transit, and
how much of our 90-day IEA obligation consists of untested
oil tickets held by governments that are themselves under
fuel supply stress. It must disclose what the contracted
supply pipeline looks like for April and whether any of NZ’s
fuel purchase contracts have been affected by the Force
Majeure declarations cascading through our supply chain. The
public deserves honest information, not silence.
2.
Activate the National Fuel Security Plan. The government’s
own Fuel Security Plan (November 2025) outlines contingency
steps for exactly this scenario, including activation of the
Fuel Sector Coordinating Entity to lead disruption response.
These mechanisms should be activated now, publicly and
transparently, not held in reserve until shortages are
already upon us.
3. Prepare an equitable rationing
framework using Tradable Energy Quotas (TEQs). If rationing
becomes necessary, and with each day this crisis continues
it becomes more likely, the only question is whether it will
be fair or chaotic.
Without a rationing framework, the
default outcome is price rationing: pump prices spike, panic
buying accelerates shortages, and those least able to afford
fuel, including rural communities, farmers, freight
operators, and lower-income households, are left most
exposed. This is already happening in
Australia.
Tradable Energy Quotas (TEQs) provide a
proven, equitable alternative. Every citizen receives an
equal basic energy entitlement. Those who use less can sell
their surplus. Those who need more, such as farmers and
freight operators, can purchase additional units on an open
market. The system guarantees a floor for vulnerable
households while accommodating the varying energy needs of
different sectors.
TEQs are explicitly designed for
precisely this situation: a nation confronting immediate
fuel scarcity while needing to manage a longer-term
structural transition away from imported fossil fuels. The
system was subject to extensive UK Government scrutiny and
was endorsed by the UK All Party Parliamentary Group on Peak
Oil. I first called for investigation of TEQs in my August
2025 submission to the DPMC Long-term Resilience Briefing on
behalf of the Wise Response Society. The current crisis
makes that call not merely urgent but overdue.
4.
Acknowledge the structural reality. This crisis is not an
aberration. It is the predictable consequence of a nation
with no domestic refining, no meaningful strategic reserve,
and near-total dependence on imported hydrocarbons sitting
at the end of the world’s longest and most fragile supply
chain. The long-term response must include rapid
electrification of transport and industry, investment in
decentralised domestic renewable energy, and planned
reduction in aggregate energy demand. But those measures
take years. The rationing framework is needed
now.
The window is
closing
One week ago, the closure of the
Strait of Hormuz was an emerging crisis. Today, it is an
established fact with Force Majeure declarations cascading
through every link in New Zealand’s fuel supply chain. The
strait is not reopening. The conflict is not ending quickly.
The Asian refineries that supply New Zealand are cutting
output and restricting exports. Australia is already
rationing.
New Zealand has perhaps two to three weeks
of physical fuel in the country. The tankers and purchase
contracts that are supposed to replenish those stocks are
being disrupted by Force Majeure declarations across the
supply chain. The oil tickets that make up the bulk of the
90-day headline figure have never been tested. The time for
contingency planning was before this crisis began. The time
for transparency is now. The time for rationing preparation
is before the queues form, not
after.
