Overview:
Fuel prices across the Pacific could rise sharply in the coming months as tensions escalate in the Middle East following attacks on Iran by United States and Israel. Analysts warn disruptions in the vital Strait of Hormuz shipping corridor — which carries about one-fifth of the world’s oil supply — could push crude prices toward US$100 a barrel, triggering wider economic impacts for Pacific island nations heavily dependent on imported fuel.
SYDNEY, 04 MARCH 2026 (RNZ PACIFIC) — Analysts are warning fuel prices are expected to jump in the Pacific following the Israeli and U.S attacks on Iran, and the subsequent response by Iran.
Iran borders the Strait of Hormuz, which carries 20 percent of the world’s oil and gas supply, and shipments have been suspended following the attacks.
Crude oil prices could climb as high as US$100 per barrel, leading to widespread concerns the Middle East war could precipitate into “a global energy crisis”.
Pacific Island fuel prices are generally high and volatile due to import dependency and shipping distance.
Saul Kanovic, an energy sector analyst at MST Financial in Sydney, told RNZ Pacific the “threat is severe”.
“If the situation doesn’t de-escalate and the passage through [the Strait oh Hormuz] remains significantly disrupted, we’re looking at a global energy crisis that we haven’t seen since the ’70s” Kanovic said.
“This could be bigger than that.”
Kanovic said that more isolated nations with less diversified economies will suffer from a greater exposure to these price shocks.
“Cost of transport is going to go up from a fuel cost perspective, but we might also see insurance premiums rising.”
In the Pacific, imported fuel is usually paid for by forward contracts in advance, and in bulk orders that can last months, as a hedge against price shocks.
But the impact could embed itself into freight costs, both for shipping and air, which in the Pacific is already relatively high given the distance.
Glen Craig, Vanuatu’s special envoy for international development, told RNZ Pacific the severity of the impact will depend on whether the duration of the conflict outpaces a Pacific nation’s petroleum reserves.
“No one is panicking now, but there is definitely going to be some fuel price increases at some stage,” Craig said.
“We should be okay, but it depends on how big and how long this conflict is going to go for.”
When it hits, Craig said it will likely be reflected in all imported goods on Pacific shelves, as well as tourism and regional travel.
“It’s a bit like if you’re on a busy motorway, and there’s an accident on the road 30 kilometres ahead; it might take half an hour to trickle down to the end, but it eventually gets to you.”
“I would dare say we’re looking at something in maybe four months’ time.”
Papua New Guinea’s Foreign Minister Justin Tkatchenko saw some potential upside for his country as a petroleum and oil exporter.
“It will definitely benefit PNG, but then there’s the other side, where fuel prices for the domestic market will then go up,” Tkatchenko said.
PNG is predominantly a petroleum gas exporter, with China, Japan and Taiwan as its biggest importers.
With LNG prices impacted by the Middle East, but PNG protected by distance, it leaves a shortage that they can fill.
“Unfortunately, it’s the consumers that will cop it, the people, and they are the ones that end up paying for it,” Tkatchenko said.
“So yeah, it’s good in one way, but definitely won’t help out people in the long run.”
A higher price means a higher tax take. According to its 2025 budget, PNG’s mining and petroleum tax drew in roughly US$971 million, a 16.5 percent increase from 2024.
The MPT, which is linked to gains from the sale of mining and petroleum goods, comprises PNG’s second largest source of tax revenue.
It may put the government in a position where it can commit to supporting consumers through any eventual price shock, as Prime Minister James Marape told local media over the weekend…. PACNEWS