Eve is here. When I lived in Australia (2002-2004), my general impression was that policy-wise most things were done either brilliantly (such as the CSIRO until the neoliberals took notice after my time) or stupidly (introducing a highly burdensome value-added tax for businesses when the simpler retail sales tax would have been raised by the same amount). This is an example of something that is “stupid” and, even worse, can have disastrous consequences. When I was there, Oz was in the process of signing a contract to export offshore LNG to China…but I didn’t know it was in a position to export crude oil and import refined products. This is obviously dangerous for faraway countries.
By Natalia Katona, a freelance product analyst based in the United Arab Emirates. First appearance: OilPrice
Australia’s long-standing model of exporting crude oil and importing refined fuels is crumbling amid supply disruptions. Approximately 80-90% of fuel demand (approximately 850,000 barrels per day) is dependent on imports, and the system is highly exposed to export restrictions in Asia. With product inventories around 30 days and domestic refining barely covering 20% of demand, the import disruption is quickly leading to a real supply crisis.
Australia has long been synonymous with resource-rich countries, rich in minerals, energy and hydrocarbons, including its own oil production. But today, the disruption of imports has exposed how dependent the country has become on refined products from abroad, leaving it in the paradoxical position of competing for fuel.
Australia continues to produce crude oil domestically, at around 320,000 barrels per day, but its dependence on downstream production is overwhelming. In 2025, the country will import approximately 850,000 barrels of refined products per day, compared to a total demand of approximately 1.1 million barrels per day, with 80-90% of consumption dependent on external suppliers. Even before the current disruption, strategic fuel stocks were only 37 days long, just a third of the IEA’s requirements.
The unraveling of today’s crisis was triggered by a combination of disruptions to shipping through the Strait of Hormuz and export restrictions imposed by major Asian suppliers. China, Thailand and South Korea are all major exporters to Australia and have fully or partially restricted exports of refined products. South Korea alone accounts for about a quarter of Australia’s imports, supplying approximately 220,000 barrels per day, of which approximately half is diesel (approximately 120,000 barrels per day), the most important fuel in Australia’s demand structure and the segment with the most severe supply shortage.
Jet fuel is primarily sourced from China, with cargoes amounting to approximately 190,000 barrels per day in February 2026. Gasoline flows are primarily sourced from Singapore and South Korea, which together account for around two-thirds of Australia’s average gasoline imports of 210,000 barrels per day in 2025.
The impact was immediate. On March 22, Australia’s Energy Minister confirmed that six tankers carrying refined products from Malaysia, Singapore and South Korea had been canceled or postponed. Officials have repeatedly stressed that charges are still pending. In reality, however, water inflows primarily reflect shipments that departed before the disruption took hold, and the true extent of the shortage will not become clear in the coming days.
For the first time in decades, Australia has turned to the United States as an emergency supplier. Approximately 240,000 tons of refined fuel has been secured, including approximately 120,000 tons of diesel, 70,000 to 80,000 tons of gasoline, and approximately 35,000 tons of jet fuel. The shipment consists of at least six vessels, including three with multi-species cargo from ExxonMobil, two with diesel cargo from BP, and one with gasoline cargo from Vitol. In total, this is the largest monthly influx of US fuel into Australia since the 1990s.
Logistics alone highlights the seriousness of the disruption. The shipping time from the U.S. Gulf Coast to Australia is 55 to 60 days, and the freight rate is about $20 per barrel, compared to $5 to $6 per barrel on typical Asia-Pacific routes before the crisis. Price trends for local products temporarily obscured that disadvantage. On March 18, prices for gasoline and diesel deliveries from Singapore and Houston settled at about $161 per barrel. As of March 25, Singapore rates are looking attractive again. That’s around $153 per barrel, compared to Houston’s rate of $164 per barrel. However, price is no longer the deciding factor. The problem turned to physical availability. As unsold cargo in Asia becomes increasingly rare, the US may be Canberra’s only reliable path out of this import logjam, despite longer routes and more expensive cargo.
There is little relief for Australia’s domestic refining system. The country operates only two refineries, Lytton (110,000 barrels per day) and Geelong (120,000 barrels per day), with a total production capacity of 230,000 barrels per day, covering only about 20% of national demand. Both facilities have structural limitations. These crude oils are entirely dependent on imported crude oils as Australia’s domestic production (mainly ultra-light, condensate-rich streams with API gravity above 55-60) is not suitable for their composition. The refinery itself is an older asset built in the 1950s and 1960s and designed for different crude oil blends and market environments. Its production profile is also consistent with domestic demand. Australia’s refineries are heavy on petrol, producing around 100,000 barrels per day and 80,000 barrels of diesel, but consumption is skewed toward diesel, with this segment currently under the greatest stress.
The decline in the refining sector reflects long-standing structural pressures. Between 2012 and 2022, five refineries shut down due to low profit margins, high operating costs, and competition from highly complex mega-refineries across Asia. To maintain remaining production capacity, the government extended financial support to both remaining power plants. The Fuel Security Services Payment (FSSP) scheme (originally scheduled to expire in 2027) has been extended until 2030, effectively subsidizing domestic refining. Maintenance schedules, including planned work at Lytton, have been postponed as authorities put pressure on facilities to maintain maximum capacity.
In parallel, the government activated emergency response measures. On March 13, it released 4.8 million barrels of gasoline and diesel from its strategic stockpile. However, the country’s stockpiles are structurally below IEA standards and limited, constraining how long such interventions can continue. As of March 17, Australia had just 30 days’ worth of diesel and jet fuel and 38 days’ worth of petrol (in contrast to the IEA’s 90-day stock level). All categories remain below national minimum stockpile requirements, with diesel at 18%, jet fuel at 28% and gasoline at 78%.
Authorities are moving to ease fuel specifications to widen supply options. Gasoline sulfur limits were temporarily relaxed from 10 ppm to 50 ppm, and diesel flashpoint requirements were reduced from 61.5 °C to 60.5 °C over a six-month period. These adjustments will allow a wider range of imported fuels to enter the market and allow two domestic refiners to sell previously non-compliant products domestically.
A potential solution to Australia’s import problems may lie with two major suppliers. First, Korea. South Korean authorities introduced restrictions on exports of refined products, capping them at an average monthly level in 2025. While this will limit supply growth, it will not completely preclude access to South Korea’s volumes as long as Australia remains competitive in pricing and continues to bid. The second is India. Before the EU restricted imports of refined products from Russian crude oil in January 2026, India was exporting about 160,000 barrels of diesel to Europe per day. Those volumes previously destined for Europe are being redirected as U.S. sanctions on Russian barrels are lifted and Indian refiners are buying more Russian crude. In this context, Australia could emerge as a natural alternative destination for such flows.
Refineries may be operating at full capacity, but their limited scale and production is biased toward gasoline rather than the more important diesel, leaving gaps that cannot be filled. Imports are still arriving, but most are from cargo that was sailing before the disruption and the imposition of export restrictions across Asia. Fuel stocks are already well below the IEA’s 90-day standard, and the outlook is increasingly grim. On the contrary, this crisis has already provided important lessons. For a remote country like Australia, domestic refining is no longer just a matter of economic efficiency, but of national security.
