ScenariosHormuz Closure / Energy Shock
Energy

Hormuz Closure / Energy Shock

32%
est. probability
qualitative editorial estimate, not a measured forecast
Timeframe
Ongoing risk
Pillars stressed
P6: Defence SurgeP3: Industrial BaseP2: Fiscal Engine

Strait of Hormuz blocked by Iranian or proxy action, disrupting global oil and LNG flows. Australia's emergency drawdown covers fewer than 5 days at wartime consumption rates.

Trigger Conditions

1.Iran-US or Iran-Israel military confrontation escalates
2.Houthi-style proxy attacks on shipping extend to Hormuz itself
3.Iranian domestic crisis requires nationalist external action

Consequence Cascade

1

Jet fuel prices triple within days — RAAF operational tempo constrained

2

Emergency drawdown exhausted in fewer than 5 days at wartime consumption — well below IEA's 90-day obligation

3

Diesel shortage affects military logistics and civilian supply chains simultaneously

4

LNG exports disrupted — economic shock to federal revenue

5

IEA emergency reserves activation — Australia's 'ticketed' overseas holdings inaccessible

The Book's Prescription

90-day physical reserves stored on Australian soil. Domestic refining capacity to process Australian crude. Gas reservation policy ensuring domestic supply. These are not expensive — they are existentially cheap compared to the alternative.

Sources

  • ·Australian Institute of Petroleum / IEA, 2024-2025
  • ·Federal Reserve History / Britannica, 1973-74 oil shock
  • ·DCCEEW liquid-fuel stocks (peacetime reserves ~21-36 days), 2026
  • ·Unprepared — prescription

Probability is a qualitative editorial estimate, not a measured forecast. Lines marked “prescription” are the book's recommendation, not a real-world fact.

Stressed Pillars — Deep Dive

Pillar 6
Defence Surge
61,189 ADF personnel against 140,000 target. ~2-3 operational submarines against a 230+ platform target. Zero coastal missile batteries. 34 days diesel reserves.
0
/ 100
Pillar 3
Industrial Base
Australia imports ~80% of major defence equipment. Manufacturing is 5.1% of GDP — lowest in OECD. GWEO targets 4,000 GMLRS rounds/year by 2029. Ghost Shark and Ghost Bat are on track.
3
/ 100
Pillar 2
Fiscal Engine
Defence spending at 2.05% GDP against a 5% target. Gross Commonwealth debt at $993B growing at ~8%/year. NDIS at ~$49B/year versus its original design of $22-25B.
4
/ 100

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