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Australia faces an increasing risk of liquid fuel shortages and rising prices following reports that China has instructed its oil refineries to cease all fuel exports.
This decision adds a layer of uncertainty to the ongoing global concerns regarding the Iranian conflict’s duration and its potential effects on oil supply chains.
The Australian Financial Review disclosed on Friday that China has communicated to its oil refiners to suspend all exports, raising questions about the fate of at least two shipments previously destined for Australia.
Additionally, two vessels have been attacked in the Strait of Hormuz—an essential global oil passage—making it probable that future shipments may avoid this route amid the continuing conflict.
The reduction in oil supply has significantly impacted Asian refineries, including those in China, forcing these nations to reevaluate their own strategic reserves of gasoline, diesel, and jet fuel.
China Instructs Refiners to Halt Fuel Shipments
Asian countries gets up to 90 per cent of their oil from the Middle East. As a net importer of liquid fuels, Australia is heavily reliant upon exports from Asian refineries. This is particularly true for jet fuel.
Aviation experts have long warned of the susceptibility of Australia to jet fuel disruption. For example, the Sydney Airport’s chief executive officer, Scott Charlton, has indicated Sydney is completely reliant on jet fuel imports and has no refinery capacity.
Australia gets about 30 per cent of its aviation fuel from China. David Gray/Getty
On Friday, the Australian Financial Review reported China had notified oil refiners to halt all exports, casting doubt over at least two cargoes due to be shipped to Australia
This makes any decision by China to stop exports of jet fuel to Australia extremely concerning. Depending upon how long this continues, it is likely to cause significant disruptions to flight scheduling. In 2025 Australia imported about 32 per cent of its jet fuel from China.
Without these exports, Australia must turn to other countries such as South Korea, Taiwan, Singapore, Malaysia and India. However, they are also experiencing the impact of the Middle Eastern conflict, and it is possible further export restrictions from these countries may follow.
When stockpiles really matter
If this happens, Australia will need to rely upon its strategic stockpile of jet fuel because it has very little domestic refinery capability. Unfortunately, these stockpiles are not significant.
As of mid-March 2026, the Department of Industry, Science and Resources confirmed Australia has approximately 29 to 32 days of jet fuel in reserve, which amounts to to approximately 802 million litres.
These stocks are held either onshore at storage facilities or on ships located within Australia’s exclusive economic zone, which extends extends from 22 to 370 kilometres from the coastline of Australia and its external territories,.
This stockpile is consistent with the minimum domestic stockpile obligations imposed by the Australian government.
Petrol prices across Australia have soared in response to the escalating war between Iran, the US, Israel and other countries
However, Australia has not complied with the 90-day stockpiling obligation for members of the International Energy Agency (IEA), and cannot provide international assistance.
In recent days, the IEA has ordered its member states release the biggest oil stockpile reserves in history.
Four hundred million barrels of emergency oil, representing a third of the total stockpiles of all member states, were released. This is far more than the 2022 release of 182 million barrels of oil by IEA countries following Russia’s full-scale invasion of Ukraine.
What will happen to Australian flights?
Australia’s jet fuel supply chain is designed around continuous tanker deliveries, rather than long term storage.
Large airports store jet fuel in tank farms, with mutiple storage tanks, connected to pipelines and hydrant systems. These facilities can only hold a few weeks of jet fuel at a time.
This means airports will run out quickly if new supplies do not arrive.
There are many reasons why Australia has not increased its security stockpile of liquid fuel.
These include a decline in domestic refining capacity, reliance upon cheaper global supplies and costs and space associated with fuel storage. However, the lack of a significant stockpile has now put Australia in a precarious situation.
If jet fuel deliveries to airports completely stop, airports will need to rely upon their reserves. Jet fuel reserves would run low within a few weeks, or less.
Authorities are likely to prioritise emergency and military flights, reduce commercial aviation and impose fuel rations.
It is unclear what the current impact of fuel export restrictions upon flight scheduling will be. Qantas, the biggest user of jet fuel in Australia, has indicated it will need to increase its fares, however at this stage flights have not been cancelled.
But this is on the cards if supplies do not arrive beyond March, and there is a need to impose fuel rationing.
Air New Zealand has already cut 1,100 flights from its service due to fuel pricing and supply issues.
There are concerns this will lead to increased airfares, fuel surcharges, flight reductions and cancellations in the immediate future. In the longer term, we might also see the prospect of flight rationing.
