Australia Faces Jet Fuel Crisis as China Halts Exports, Iran Conflict Escalates
Australia’s vulnerability to liquid fuel shortages and price hikes has intensified following reports China has instructed oil refiners to halt all fuel exports. This development coincides with ongoing global uncertainty surrounding the Iran conflict and its potential impact on oil supplies.
China’s Export Halt and the Impact on Asian Refineries
On Friday, reports surfaced that China had notified oil refiners to cease all exports, raising concerns about at least two cargoes destined for Australia. This decision comes as Asian refineries, which supply up to 90% of the region’s oil, are receiving significantly reduced crude oil volumes due to the instability in the Middle East. These refineries must now reassess their own strategic fuel reserves.
Strait of Hormuz Disruptions and Rising Shipping Costs
The situation is further complicated by recent incidents in the Strait of Hormuz, a critical maritime route. Two transport ships have been damaged, making the passage increasingly risky and likely deterring future voyages while the conflict continues. This disruption has contributed to soaring shipping freight rates, exacerbating the supply chain challenges.
Australia’s Reliance on Imported Jet Fuel
As a net importer of liquid fuels, Australia is heavily reliant on exports from Asian refineries, particularly for jet fuel. Sydney Airport’s CEO, Scott Charlton, has highlighted the city’s complete dependence on jet fuel imports, with no domestic refinery capacity. This makes any disruption to supply chains particularly concerning.
Decreasing Stockpiles and International Obligations
Australia imported approximately 32% of its jet fuel from China in 2025. With China halting exports, Australia must seek alternative sources like South Korea, Taiwan, Singapore, Malaysia, and India. However, these countries are as well feeling the effects of the Middle Eastern conflict, and further export restrictions are possible. Australia currently holds approximately 802 million litres of jet fuel in reserve – roughly 29 to 32 days’ worth – consistent with minimum domestic obligations, but insufficient to meet the 90-day stockpile requirement for International Energy Agency (IEA) members.
The IEA has recently authorized the release of 400 million barrels of oil reserves, the largest such release in its history, in an attempt to stabilize global markets. However, Australia’s limited stockpiles prevent it from contributing significantly to this international effort.
Impact on Australian Flights and Potential Rationing
Australia’s jet fuel supply chain is designed for continuous deliveries, with limited long-term storage capacity at airports. Facilities typically hold only a few weeks’ worth of fuel. This means supplies could quickly dwindle if new shipments are delayed. Qantas, Australia’s largest airline, has indicated it may need to increase fares, but has not yet cancelled flights. However, cancellations and fuel rationing are potential outcomes if supplies do not arrive beyond March.
Air New Zealand has already cut 1,100 flights due to fuel pricing and supply issues, signaling a potential trend of increased airfares, fuel surcharges, flight reductions, and even rationing in the near future.
Why Australia Lacks Fuel Security
Several factors contribute to Australia’s lack of fuel security, including a decline in domestic refining capacity, reliance on cheaper global supplies, and the costs and logistical challenges associated with large-scale fuel storage.
FAQ: Australia’s Jet Fuel Crisis
Q: How much jet fuel does Australia have in reserve?
A: As of mid-March 2026, Australia has approximately 802 million litres of jet fuel in reserve, equivalent to 29-32 days of supply.
Q: Is Australia meeting its IEA stockpile obligations?
A: No, Australia is not currently meeting the 90-day stockpile obligation for IEA members.
Q: What is the IEA doing to address the crisis?
A: The IEA has authorized the release of 400 million barrels of emergency oil reserves.
Q: Will flights be cancelled in Australia?
A: While Qantas has not yet cancelled flights, it is a possibility if fuel supplies do not improve.
Q: What is the biggest source of jet fuel for Australia?
A: China was the biggest source, supplying around 32% of Australia’s jet fuel in 2025.
