Australia has less than 50 days of its fuel supply left, according to the latest government figures.
The Sydney Morning Herald yesterday reported that the country's supply of crude oil stands at 22 days, LPG at 59 days, petrol at 20 days and diesel at 21 days.
Aviation fuel has also dipped to just 21 days.
Overall, Australia's net coverage is coming in at 49.6 days, despite an agreement with the International Energy Agency to store 90 days worth of fuel.
The decline, which Environment and Energy Minister Josh Frydenberg says is due to a combination of fewer domestic refineries, supply and demand and conflict in the Middle East and South China Sea, has prompted a review by the government.
"With the supply and demand dynamics of global energy markets changing rapidly and nearly a decade since the last National Energy Security Assessment, the time is right to relook at and rethink Australia's fuel security," Mr Frydenberg said.
"In the last 10 years, three of Australia's seven domestic refineries have closed and our domestic production of liquid fuels has declined by a third as existing fields become exhausted.
"As a result, Australia's reliance on imported fuel has increased. On any one day, there are up to 45 oil tankers en route to Australia, with more than 20 days' worth of supplies on board."
Mr Frydenberg's announcement comes after an IEA report earlier this year, which said that Australia was "vulnerable to unexpected changes in Asian regional demand patterns" and to "any disruptions of the main supplies from the Middle East, on which the whole Asian region and Australia are dependent."
Liquid fuels are required for 98 per cent of Australia's transport needs, and 37 per cent of the country's energy use.
"There is no room for complacency and this review which will bring together the key stakeholders will detail the steps necessary to ensure Australia continues to enjoy an affordable and reliable fuel supply," Mr Frydenberg said.