Yves here. When I lived in Australia (2002-2004), my general impression was that policy-wise, it did most things brilliantly (like its CSIRO until the neoliberals got to it after my time) or stupidly (implementing a VAT, which is very burdensome to businesses, when a much simpler retail sales tax will raise as much). This is an example of “stupidly” and worse, potentially disastrously so. When I was there, Oz was en route to contracting to export its offshore LNG to China…but I had no idea that it had gotten itself in the position of exporting crude and importing refined product. This is obviously precarious for a country so remote.
By Natalia Katona, a freelance commodity analyst, based in the United Arab Emirates. Originally published at OilPrice
- Australia’s long-standing model of exporting crude and importing refined fuels is breaking down amidst supply disruptions.
- Around 80–90% of its fuel demand (around 850,000 b/d) is import-dependent, leaving the system highly exposed to Asian export restrictions.
- With product stocks at ~30 days and domestic refining barely covering 20% of demand, import disruptions are rapidly translating into a real availability crisis.
Australia has long been synonymous with resource abundance — a country rich in minerals, energy, and hydrocarbons, including its own crude oil production. Yet today, it finds itself in the paradoxical position of scrambling for fuel, as disruptions to imports expose just how dependent the nation has become on refined products from abroad.
Australia continues to produce oil domestically, with crude output around 320,000 b/d, yet its downstream dependencyis overwhelming. In 2025, the country imported roughly 850,000 b/d of refined products against total demand of about 1.1 million b/d, leaving 80–90% of consumption reliant on external suppliers. Even before the current disruption, strategic fuel stocks stood at just 37 days — barely one-third of IEA requirements.
The trigger for today’s unraveling crisis has been a combination of disrupted shipping through the Strait of Hormuz and export restrictions imposed by key Asian suppliers. China, Thailand, and South Korea – all major exporters to Australia – have introduced full or partial curbs on refined product exports. South Korea alone accounts for roughly a quarter of Australia’s imports, supplying around 220,000 b/d – about half of which is diesel (around 120,000 b/d), the most critical fuel in Australia’s demand structure and the segment with the deepest supply deficit.
Jet fuel has largely been sourced from China, with February 2026 cargoes reaching around 190,000 b/d. Gasoline flows are mostly sourced from Singapore and South Korea, which together accounted for roughly two-thirds of Australia’s average 210,000 b/d gasoline imports in 2025.
The impact has been immediate. On March 22, Australia’s Energy Minister confirmed that six tankers carrying refined products from Malaysia, Singapore, and South Korea had either been cancelled or deferred. Officials have repeatedly stressed that cargoes are still arriving nonetheless. In reality, however, theincoming volumes on water largely reflect shipments that departed before the disruption took hold – with the true extent of the shortage yet to demonstrate itself in the upcoming days.
For the first time in decades, Australia has turned to the US as an emergency supplier. Around 240,000 tons of refined fuels have been secured – including roughly 120,000 tons of diesel, 70,000–80,000 tons of gasoline, and about 35,000 tons of jet fuel. The shipments consist of at least six vessels: three multi-product cargoes from ExxonMobil, two diesel shipments from BP, and one gasoline cargo from Vitol. Collectively, this marks the largest monthly inflow of US fuel to Australia since the 1990s.
The logistics alone underline the severity of the disruption. Transit times from the US Gulf Coast to Australia stretch to 55–60 days, with freight costs around $20/bbl, compared with typical Asia-Pacific routes that stood at $5–6/bbl before the crisis. The price dynamics of regional products briefly blurred that disadvantage: on March 18, delivered gasoline and diesel from Singapore and Houston converged at roughly $161/bbl. As of March 25, Singapore cargoes look more attractive again — around $153/bbl versus $164/bbl from Houston. But pricing is no longer the decisive factor. The issue has shifted to physical availability. With unsold cargoes in Asia increasingly rare, the US – despite longer routes and more expensive freight – might become the only reliable way out of this imports’ deadlock for Canberra.
Australia’s domestic refining system offers little relief. The country operates just two refineries – Lytton (110,000 b/d) and Geelong (120,000 b/d) – with combined capacity of 230,000 b/d, covering only around 20% of national demand. Both facilities are structurally constrained. They depend entirely on imported crude, as Australia’s domestic output (largely ultra-light, condensate-rich streams with API gravity above 55–60) is unsuitable for their configuration. The refineries themselves are aging assets, built in the 1950s and 1960s, designed for a different crude blend and market environment. Their output profile also mismatches domestic demand. Australian refineries are gasoline-heavy, producing around 100,000 b/d of gasoline and 80,000 b/d of diesel, while consumption is skewed toward diesel – the segment now under the greatest stress.
The refining sector’s decline reflects years of structural pressure. Between 2012 and 2022, five refineries ceased operations, driven into the ground by weak margins, high operating costs, and competition from highly complex mega-refineries across Asia. To keep the remaining capacity alive, the government has extended financial support to both remaining plants. The Fuel Security Services Payment (FSSP) scheme (originally due to expire in 2027) has been extended to 2030, effectively subsidizing domestic refining. Maintenance schedules, including planned work at Lytton, have been deferred as authorities push facilities to sustain maximum throughput.
In parallel, the government has activated emergency response measures. On March 13, it released 4.8 million barrels of gasoline and diesel from strategic reserves. Yet the country’s limited stockpile – structurally below IEA thresholds – constrains how long such interventions can be sustained. As of March 17, Australia held just 30 days of diesel and jet fuel, and 38 days of gasoline (as opposed to the IEA requirement of 90 days stock levels). All categories remain even below the national Minimum Stockholding Obligations — diesel by 18%, jet fuel by 28%, and gasoline by 78%.
Authorities have moved to relax fuel specifications in an effort to widen supply options. Gasoline sulphur limits have been temporarily eased from 10 ppm to 50 ppm, while diesel flashpoint requirements have been reduced from 61.5°C to 60.5°C for a six-month period. These adjustments allow a broader range of imported fuels to enter the market and enable the two domestic refiners to sell previously non-compliant products locally.
A potential resolution to Australia’s import struggles may lie with two key suppliers. First, South Korea. Korean authorities have introduced limits on refined product exports, capping them at 2025 monthly average levels. While this restricts any growth in supply, it does not fully exclude Australia from accessing Korean volumes – provided it remains competitive on pricing and bids up. Second, India. Prior to the EU’s January 2026 restrictions on imports of products refined from Russian crude, India exported approximately 160,000 b/d of diesel to Europe. With US sanctions on Russian barrels now lifted and Indian refiners increasing their purchases of Russian crude, these previously Europe-bound volumes are being redirected. In this context, Australia could emerge as a natural alternative destination for such flows.
Refineries may be running at full capacity, but their limited scale – and production skewed toward gasoline rather than the more critical diesel – leaves a gap they cannot close. Imports are still arriving, but largely from cargoes that sailed before the disruption and the imposition of export restrictions across Asia. With fuel stocks already well below the IEA’s 90-day benchmark, the outlook is increasingly strained. If anything, the crisis has already delivered its key lesson: for a country as remote as Australia, domestic refining is no longer just a matter of economic efficiency – it is a question of national security.
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If you listen to our politicians things are going great though behind the scenes it would be more like shuffling the deck chairs on the Titanic. No doubt the reason that we do not have adequate refinery capacity is because of “efficiency” based on a-just-in time model. Neoliberalism at its finest. Personally I think that we should ask the Russians if they have oil to sell but heads in Canberra would explode at that idea. So we buy it from India and pretend that it is Indian oil and not Russian oil instead.The thing that really concerns me is the diesel supply as you need it for trucks to distribute things like, oh I don’t know, like food for the supermarkets and fuel for farmer’s tractors. I would guess that the wheels will start to come off by the end of next month and there will be no denying our situation. That is when they will start with limits of fuel purchases and odd & even license plates. Could we end up with food riots here by the end of the year? No idea. But I am ruling out no possibility.
Maybe Mad Max was a bit more prophetic than expected…
🛎️ 🛎️ 🛎️
You forgot agricultural needs. On my forty, I’ve got twenty-five acres to plant. I topped up my ag diesel, in November. I went a week ago to top the tank off and the price for exempt diesel was up $2.25 per gallon delivered. I can get on road diesel in Idaho (12 miles a way) for $1.75 per gallon. I have 60 gallon portable tank. Also, now they’re limiting the purchases to $100 per transaction. Last year there were a lot of the big wheat farms that didn’t plant. They put in winter wheat in the fall. With the cost of fuel, fertilizer and other chemicals, I don’t expect to see much spring wheat planted. Next, week I’ll get my seed (even though planting is six weeks a way) just to get it before the cost goes up and stuff gets short. The Epstein war is really going to hurt agriculture here and world wide. The die hard MAGA farmers around here think the everything is going back to normal when Trump wins the war. Idiots.
The die hard MAGA lawyers, engineers, business owners, and insurance agents around here also think the everything is going back to normal when Trump wins the war, which to them is a necessary war to prevent Iran from dropping a nuclear bomb on New York City.
Yes. And they don’t want to hear otherwise, so their minds cannot be changed through gentle discussion. These people will be the ones panic buying toilet paper or whatever in a week or 3.
GO OVER TO WILDING, DIRKE, GROWING WILD FLOWERS, OR WINDMILLS, OR SOLAR, OR JUST TAKE THE SUBSIDIES FOR DOING NOTHING. THAT’S THE ONLY WAY TO MAKE MONEY IN FARMING NOW.
You are in a unique area; I have family up in your neck of the woods. Back and forth, between the states they go. Medical care, usually to the West. Selection and “insurance prices” seem to drive this. All the Best, from my North 40, Klamath/Siskiyous, dry dry dry… aka, it will burn burn burn…🔥🐴❤️
May well be QR codes matched to your rego this time. Can’t waste the system left over from Covid. The same problem exists for our food as well, we grow our own food but a lot is sent overseas and processed to be imported back now. The ships to do this will eventually run short of fuel oil now if the factories in Asia don’t stop. Three weeks in the storage and diesel already not getting to the farmers. Distribution should have been handed over to Army logistics already.
That is ignoring all the things we got into trouble with during Covid like water treatment, medicines etc. there is a list the Army made at the time and the pollies ignored. Although I loathe his foreign policy Andrew Hastie is the only politician serious about Australian resilience.
Australia doesn’t have politicians, instead we have American provincial governors.
I had no idea about any of this. Blissful in my igrunce.
Shame on all of us that we didn’t start working hard after the two 1970’s Oil Crises.
“When the Revolution comes, will your bicycle be ready?”
-Not Che Guevara
Has this whole Strait of Hormuz incident been perhaps the best argument thus far for switching to electric in terms of vehicles? I remember Australia had some innovative companies (Janus, Bosscap, Electrovaya) leading the way toward converting diesel trucks to full electric with swappable batteries and very decent range.
EVs in difficult times only make sense if you have domestic solar + batteries.
Those with cheap gensets: change the oil and charge the starter battery (if applicable), and run it on a load for 20 minutes to get it ready for an emergency. If the tank had old (> 1 year) fuel in it, drain it and replace it first before trying to start it.
Australians must surely regret their decision to buy American nuclear submarines instead of Chinese solar panels right now.
Absolutely!
You would have thought Australia could do raw-for-refined barter trade with Asian countries.
That is effectively what they do (with yhe money step in between). However, if various countries identify refined oil products as the critical element to have, then they won’t want to trade that. Not short term anyway.
Trying to figure out how it is more efficient to ship oil to another country, have them refine it, and then ship it back. It doesn’t seem like refining oil would be a labor-intensive enterprise such that cheaper wage countries have an advantage that overcomes the shipping costs. But apparently so.
The article didn’t get into it, but this seems to be a worldwide phenomenon, countries with oil don’t seem to build their own refining capacity for their own crude, must export. I find it odd, but perhaps the type of crude extracted by Australia doesn’t lend itself to diesel, which is what Australia needs?
Oz just dropped the 65C flash point on diesel to around 50C so more supply will be available. Down side is on new engines with high spec, means extra down the road costs and particulate issues.
Oz is so different than other developed nations going back to its origins aka it was always a resource extraction/export driven nation as a member of the commonwealth. Since I moved here in 95 I got to see neoliberalism take over its politics and social perceptions. Currently politics is a reflection of the USA, Labour = Democrats, Liberal = upper class city/suburb Republicans, National party = MAGA/DOGE.
Anyone not on board was driven out of academia and policy formation/debate. Hence why we export everything as international investors are not interested in building value added Mfg in this nation due to labour costs and environmental regulations, not to mention long logistical lines. Per se not so long ago a huge LNG plant was built up in Gladstone, Qld. Oz did not have the Mfg labour pool, engineers, anything to build it, hence it was outsourced to various Asian/Indian mobs and shipped over bit by bit. All of which then required rework to meet standards. At the end of the day it was built just to export LNG to Japan et al. But hay we export the best AG/Meat products Oz has because of price, say oranges, then import the cheap stuff from Brazil. If you want the good stuff you can still get it but, its premium price. I pay 80+ bucks a Kg for grass feed Cape Grim Mpa 2/3 cut stuff.
The same old story …. the have nots that rent or paying off a property ladder starter home and have to drive longer to work, to do anything, without the financial depth will get the worst of it as prices on everything go up. Its as old as history mate, the periphery always cops it first and the hardest so the core wealthy don’t have a sad. So the intercity rings sorts might just like with Covid have to adjust some travel plans or such other but just like then they just end up spending money on the home they spend more time in and not other stuff.
It’s a matter of history. Last century Australia’s major oil supply was from Bass Strait. Most Aussie refineries were built to refine bass strait crude. Bass strait oil has all been pumped out. Like the parrot, it has expired, gone to meet its maker.
What we have left is very light oil from mostly gas fields of the northwest coast. Because our refineries were designed to operate on Bass strait crude or similar they cannot easily run on the light grades these fields currently produce.
The obvious answer is EVs powered by wind and solar. Other countries can stop petrol and diesel but they can’t stop the wind and the sun.
@Simon, 1:40 pm
Oil refineries cost a lot to build. The same question you ask was also said about Alberta exporting its upgraded crude to the US. Why not refine it? The last time I looked (15 years ago) a greenfield refinery cost $7 billion CAD. Must be a lot more now. It would need to make a profit for many years. Today with cheap renewables expanding it probably doesn’t make economic sense for a private investor. For Australia the time to act would have been 6 years ago to prevent the closure of refineries for national security reasons and to go all in to convert to renewables.
When small oil refineries were closing down in Canada 15 or so years ago I made this very argument to a Parliamentary committee. Interestingly it was the only part of the presentation the Conservatives on the committee paid close attention to. Made no difference of course. The top Conservative brass were all neoliberals so they were sure the market would take care of it. And they were right in a way. The market is taking care of it – high priced fuel, and if it lasts, the push to renewables will accelerate. Unfortunately a large part of the population will be very negatively affected by much higher prices across the board. It would have made more sense to plan for contingencies and a controlled phase-out of fossil fuels over many years.
The old trap by which the colonies ship out the raw materials and buy them back refined. (To the degree that the shipping out of manufacturing from the US 70s forward placed us in that position. . . vis a vis countries like China, they were shipping out our middle class. . .) We like to think Oztralia as first-world, but.
Places like Florida retain some of these plantation-economic characteristics, as well. . . Southeastern forests supplied oak and pine for two navies for several years, according to EO Wilson used to supply as much oxygen–possibly as much biodiversity–as the Amazon. A lot of that 70s left economic thinking still has plenty of cogency.
“If anything, the crisis has already delivered its key lesson: for a country as remote as Australia, domestic refining is no longer just a matter of economic efficiency – it is a question of national security.”
That something as strategically obvious as this must be “learned” is about as clear an indictment of neoliberalism as can possibly be imagined — “because markets” is no way to run a country.
Autarky requires a lower standard of living, as North Korea will tell you. We sacrificed our self-sufficiency for a much higher standard of living in the 1980s. Australian industry is more expensive than South East Asian, less efficient. No such thing as a free lunch.
Efficiency or resilience? I hope you enjoy eating the former from now on, Kfish, having chosen to ignore the latter …
It isn’t even so much that it has to be learned. But that they have had the lesson during covid, after Russia invaded Ukraine and when that ship got stuck in the suez for a while. This lesson about just in time supply chains and around the world supply chains has been taught several times in the past few years and no one listens. Of course the chains are so complicated now I’m not sure it can be resolved.
For example, a large number of people are saying this shows the need for quicker electrification of energy requirements. But those supply chains are just as complicated and have been heavily disrupted now.
A quick brainstorm session:
Most importantly, ignore any pronouncements from Washington. Cut military spending to 0.5% of gdp max, only missiles for defense. Focus on energy independence.
1. A. Order as many solar panels and wind turbine as can be obtained from China
B. Order affordable Chinese electric vehicles, tax gas and offer incentives for electric.
2. Get the shut down refineries running again as much as possible, ideally move to Australia refining all its own crude production
3. Invest in any energy efficiency ideas available. Insulate buildings, increase population in cities so less commuting costs. Remote work. Public transit.
Think like and ally with the usa and this is what you will get. Aus should have electrified in the 2010s while china was their trading partner. Funny the usa isnt flying out oil to them in a crisis.
“Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”
-Donald Horne (1964)