A sharp escalation in tensions between the United States and Iran has pushed oil prices higher and reminded the world of a familiar vulnerability – when energy supply is disrupted, the economic consequences are felt quickly and widely. For Australia, this is not just a distant geopolitical story – it’s a cost-of-living shock, a business shock and a policy test all at once.

This policy briefing note examines how the current shock compares to previous oil supply disruptions. It examines how this price shock can spread through Australia’s economy and to households, and whether Australian consumers and businesses are facing signs of price gouging by oil suppliers.

The note also provides early policy actions Australia can take to stabilise fuel supply, support vulnerable households and strengthen longer-term resilience to future shocks.

It identifies the immediate policy priority is operational stability and protection: stabilise demand, prioritise fuel for critical sectors, monitor prices and keep supply chains functioning-while delivering targeted support to vulnerable households most exposed to rising energy and food costs, and accelerating longer-term resilience in line with international responses.