Australia's Jet Fuel Crisis Deepens as China Halts Exports Amid Middle East Conflict
Australia's vulnerability to liquid fuel shortages and price hikes has intensified significantly following reports that China has instructed its oil refiners to cease all fuel exports. This development adds to ongoing global uncertainty surrounding the duration of the Iran conflict and its profound impact on oil supplies worldwide.
China's Export Ban Casts Doubt on Australian Fuel Imports
On Friday, the Australian Financial Review revealed that China had formally notified oil refiners to halt all exports, raising serious concerns about at least two cargoes scheduled for shipment to Australia. Concurrently, two transport ships in the Strait of Hormuz, a critical global transport route, have been destroyed, making it highly unlikely that future vessels will traverse this path while hostilities persist.
This disruption means Asian refineries, including those in China, are receiving substantially less crude oil. Consequently, these refining nations must reassess their strategic requirements for essential fuels such as petrol, diesel, and jet fuel.
Australia's Heavy Reliance on Asian Refineries
As a net importer of liquid fuels, Australia depends heavily on exports from Asian refineries, with Asian countries sourcing up to 90 percent of their oil from the Middle East. This reliance is particularly acute for jet fuel, where Australia imports approximately 30 percent of its aviation fuel from China.
Aviation experts have long cautioned about Australia's susceptibility to jet fuel disruptions. For instance, Scott Charlton, CEO of Sydney Airport, has highlighted that Sydney is entirely dependent on jet fuel imports and lacks any domestic refinery capacity. In 2025, Australia imported about 32 percent of its jet fuel from China, making any decision by China to stop exports extremely alarming.
Potential Flight Disruptions and Alternative Sources
Depending on the duration of China's export halt, significant disruptions to flight scheduling are likely. Without Chinese exports, Australia may need to turn to other countries like South Korea, Taiwan, Singapore, Malaysia, and India. However, these nations are also feeling the effects of the Middle Eastern conflict, and further export restrictions from them could follow.
If this occurs, Australia will have to rely on its strategic stockpile of jet fuel, given its minimal domestic refining capability. Unfortunately, these reserves are not substantial.
Inadequate Fuel Stockpiles and International Obligations
As of mid-March 2026, the Department of Industry, Science and Resources confirmed that Australia holds approximately 29 to 32 days of jet fuel in reserve, equating to about 802 million litres. These stocks are stored either onshore at facilities or on ships within Australia's exclusive economic zone, which extends from 22 to 370 kilometres from the coastline.
While this stockpile meets the minimum domestic obligations set by the Australian government, it falls short of the 90-day stockpiling requirement for members of the International Energy Agency (IEA), preventing Australia from offering international assistance. In recent days, the IEA has ordered its member states to release the largest oil stockpile reserves in history—400 million barrels of emergency oil, representing a third of total member reserves, far exceeding the 182 million barrels released in 2022 after Russia's invasion of Ukraine.
Implications for Australian Aviation and Emergency Measures
Australia's jet fuel supply chain is designed for continuous tanker deliveries rather than long-term storage. Major airports store jet fuel in tank farms with multiple storage tanks connected to pipelines and hydrant systems, but these facilities can only hold a few weeks' worth of fuel at a time. This means airports could deplete their reserves quickly if new supplies fail to arrive.
Several factors have contributed to Australia's failure to increase its security stockpile of liquid fuel, including a decline in domestic refining capacity, reliance on cheaper global supplies, and the high costs and space requirements associated with fuel storage. This lack of a significant stockpile now places Australia in a precarious position.
If jet fuel deliveries to airports cease entirely, reserves would run low within weeks or less. Authorities are likely to prioritise emergency and military flights, reduce commercial aviation, and impose fuel rationing.
Current Impact and Future Prospects
The immediate impact of fuel export restrictions on flight scheduling remains unclear. Qantas, Australia's largest consumer of jet fuel, has indicated that fare increases may be necessary, though no flights have been cancelled yet. However, if supplies do not arrive beyond March, cancellations and fuel rationing could become inevitable.
Air New Zealand has already cut 1,100 flights due to fuel pricing and supply issues. Concerns are mounting that this will lead to increased airfares, fuel surcharges, flight reductions, and cancellations in the near term. In the longer term, the prospect of flight rationing looms large, underscoring the urgent need for strategic fuel management in Australia.
