Originally published by Eric Johnston of The Australian
13.03.2026
One of many rants delivered by grizzled oil industry fixer Tommy Norris in the Paramount series Landman has been doing the rounds this week.
The lines, delivered brilliantly by Billy Bob Thornton, talk to our dependence on crude.
“It’s in everything. That road we came in on. The wheels on every car ever made. It’s in tennis rackets and lipstick and refrigerators and antihistamines. Pretty much anything plastic. Your cell phone case, artificial heart valves … soap, hand lotion, garbage bags, fishing boats – you name it. Every f..king thing.”
And the kicker? “We’re gonna run out of it before we find its replacement.”
Oil is in everything, and the longer the war in Iran drags on, the knock-on effects will move ever more downstream, pushing up prices for everyday consumer goods while slicing growth.
As the conflict enters its third week, the “Norris Thesis” is being tested in real-time.
Equity markets are fast waking up to the fact that, while we have spent the best part of a decade talking up the dream of a post-carbon future, we are still very much trapped in a carbon present.
Despite assurances from US President Donald Trump this will be over soon, there’s little clear exit strategy and the goals are ever shifting, meaning the Middle East edges closer to a crisis point.
The first-order effect of Iran blockading the Strait of Hormuz is under way, with everyone paying more at the petrol pump to get around (transportation), but the second order is coming, and fast. Depending on how long this goes on for, that means this inflation will steadily creep into the obvious, such as power bills, and then into areas we hadn’t considered – including food, tennis rackets and lipstick.
This will feed into the Reserve Bank’s worst-case scenario: a bout of stagflation where both the economy slows and prices are rising.
Australia’s economy was well short of match fit going into this crisis, and that means governments won’t be able to spend their way out of it.
Brent crude, the global benchmark, has been on a rollercoaster, jumping to almost $US119 a barrel at the start of the week, then collapsing back to the low $US80s as the White House promised the crisis would be over soon. With every indication that Iran, under a new leader, is prepared to dig in and use energy prices as a pain point against the US administration, Brent has started pushing up again. There’s little clear path to de-escalation. Trump has posted that it was of “far greater interest and importance” to “[stop] an evil Empire” than worry about oil prices.
By the end of the week, oil again broke through the key $US100 barrier as markets largely ignored that governments around the world had pledged the biggest ever releases of strategic oil reserves to flood the market. It’s all about the Strait of Hormuz, where 20 per cent of the world’s supply passes, and Iran is determined to keep it shut.
Australia did its part on Friday, effectively releasing 4 million barrels of mostly diesel as well as petrol from the nation’s strategic reserves. This is a fine symbolic gesture, but it is a logistical sleight of hand. It merely lowers the regulatory floor for importers; it doesn’t manufacture molecules.
Even so, there is still real confidence among importers that Australia can get the fuel it needs for the next few weeks. But if the Middle Eastern exports are cut off beyond Easter and the war drags on further, that confidence quickly fades.
Importantly, wholesalers all report that shipments are arriving, suppliers are honouring long-term contracts, although the supply lines are starting to get more complicated. Australia sits at the end of a very long supply chain and the cost of bringing fuel into the country between the big distributers Ampol, BP, Viva Energy, Chevron and Exxon is increasing, given shipping charges have also surged.
Any shortages making headlines are all on the demand side, with panic buying at some sites behind the lack of supply. This has been more noticeable in regional Australia, where demand for diesel has spiked and sites take longer to replenish.
One national fuel retailer says sales at one of their large suburban sites have increased 800 per cent in the past week.
“For now we’re feeling relatively comfortable,” they said. “But if this goes on for, say, another four weeks, I think this is a far gloomier conversation.”
By then it won’t just be Australia, but all of Asia and the rest of the world struggling to get supplies. Production from the US’s Texan fields and Gulf of Mexico won’t be able to cover the shortfall.
RBC’s closely watched head of global commodity strategy, Helima Croft, argues if the war continues for another three to four weeks with minimal progress on maritime security, oil will pass the 2008 peak of $US146 a barrel.
It’s worth adding that Croft, a former analyst with the CIA, has an increasingly bearish outlook around the duration of the war. She says there’s now an emerging consensus in Washington that Iran will seek to continue the fight for some time to deter future Israeli and US strikes – even if the White House pushes for an early exit.
Australian companies that have just sailed through a bumper earnings season are now bracing for the oil-driven profit downgrades – particularly if Brent holds at these levels.
With inflation now back and likely to be turbocharged by higher oil, money markets are pricing almost three more rate rises this calendar year. If this plays out, it could take the cash rate to 4.6 per cent – above the peak of the last tightening cycle and a whole new level of hurt. At these levels, the cash rate would be an 11-year high.
There is now a near certain chance Michele Bullock will deliver a 25-basis-point increase on Tuesday and continue her hawkish bent. For shock value, listen if she reveals that a 50-basis-point increase was discussed at next week’s RBA board meeting.
The damage on confidence is already visible. Discretionary retail has been torpedoed: JB Hi-Fi and Myer are down 20 per cent and 40 per cent respectively this year. Even Qantas, usually able to hedge its way out of trouble, has been forced to pass on fuel costs to its international passengers, its shares down 17 per cent this year.
The broader S&P/ASX 200 index is down 1 per cent since the start of the year, with big miners and energy supporting a sagging market. Even before hostilities with Iran broke out, Australian executives were warning with increased urgency that more needed to be done to make Australia competitive. That’s the only way to ride through market shocks without resorting to spending our way out.
The delusion of the last decade – an era of cheap money, stable borders and frictionless trade – has evaporated. As National Australia Bank chairman Phil Chronican noted this week, the structural issues Australia ignored during the good years – flagging productivity, demographic challenges and energy strategy – are now being exposed.
“We have entered a very different era,” Chronican says.
This means Australia needs to do a better job adapting. Governments, business and even workers have to be faster-moving and prepared to make tough choices.
When they are functioning normally, no one gives a second thought to oil markets and the vast machinery that gets it to where it needs to go. It’s moments like these, when the production stops, that oil’s influence in every part of the economy is exposed.
The Landman was right: we are going to run out of oil before we find its replacement. But for investors, the more immediate concern is running out of growth before we find a way to pay for it.
