Updated ,first published
Petrol prices have hit a record high averaging $2.38 a litre, while Australia’s oil supply is expected to hit a rock bottom in late April when Asian refineries that provide 80 per cent of Australia’s supply run out of inventory due to the Iran oil crisis.
Australia’s government and oil importers are working to curb other oil exports and are in talks with nations across Asia and Europe, including the United States. The talks have become more urgent after China, which supplies about 4 percent of the nation’s diesel, suspended exports until the end of March.
Ampol chief executive Matt Halliday said his company, which operates 1800 service stations across the country, was struggling to find refined oil to ship to Australia beyond mid-April.
“There is a lot of buffer in the system but, ultimately, if this takes longer than a few weeks, you will see pressure on prices and international supply chains.”
Energy Minister Chris Bowen has said there are 81 oil shipments expected to arrive in Australia by mid-May, and only six have been cancelled.
However, oil exporters run supply chains on time and have not yet filled these shipments.
Asian refineries will exhaust their crude oil reserves within a month, so it is not yet clear how these shipments would be filled.
Strategic reserves of crude oil held around the world could help fill the gap, as well as new sources from countries such as Canada that are supplementing their current oil output.
The national average petrol price reached an unprecedented level of $2.38 for regular unleaded in the week ending March 20, according to the weekly price report of the Australian Petroleum Institute, which surpasses the record average of $2.19 set last week and has increased by 27 percent since the war began on February 28. 2.022 regular gasoline on March 2 reached $2. Ukraine.
Bowen announced on Tuesday the temporary reduction in diesel rates, which he said would provide more flexibility for Australian importers to source fuel from markets with lower thermal conductivity – the temperature at which fuel can burn.
Bowen earlier this month lowered gasoline prices for 60 days, which he said would allow an additional 100 million liters to flow into the domestic market.
“This six-month adjustment will reduce the so-called diesel indicator, from 61.5 degrees Celsius to 60.5 degrees Celsius, increasing diesel supply options from refiners and international sources,” he said on Tuesday.
The chief executive of the Australian Petroleum Institute, Malcolm Roberts, said that if Iran were to keep the Strait of Hormuz, through which 25 percent of the world’s oil travels, closed for a week or two, then Asian refineries that supply nearly 80 percent of Australia’s refined oil would struggle to fill their inventories.
“If this continues, eventually there will be a point where those refineries will be well and short of the crude oil they need,” he said.
“If refiners haven’t been able to meet the problem of replacement of Oil: Gasoline Supply, they will start to cut production, which some refiners are already doing, and they will also be under pressure to prioritize their domestic market … we all know it’s a unique situation, so we’ll just have to wait and see.”
However, Roberts said there is much that can be done between now and May to increase the world’s oil supply, including increased exports through the Red Sea through a pipeline through Saudi Arabia, the release of more oil from the nation’s strategic reserves, additional production from non-Middle Eastern oil producers such as Canada, or increased use of Russian oil that was previously restricted due to the invasion of Ukraine.
Macquarie University senior lecturer Lurion De Mello said there was “significant concern” about the future of oil imports, given there were no shipments to Australia scheduled to land after mid-April, according to shipping data.
“I don’t think there is a reason to panic, but it is concerning that the shipping data has not been updated with the delivery of refined oil beyond April 15,” De Mello said.
Other countries in the region that supply Australia’s refined oil have also built large oil and gas reserves as a contingency in case of major disruptions, which differed from Australia’s view of oil security, De Mello said.
“South Korea, Singapore, Japan, China have a large amount of reserves because they want to prepare well. We are always careless with the attitude of ‘he will be fine’. But we are not ready for these things.”
While the amount of supply reaching Australia has remained stable, panic buying has led to domestic shortages, particularly in regional areas.
Bowen told parliament on Tuesday that in NSW, 289 service stations were without at least one type of fuel, including 164 without diesel. In Victoria, 162 lack at least one type of fuel, as do 35 in Queensland, 46 in South Australia, six in Western Australia and six in Tasmania.
The opposition has attacked Bowen over the fuel shortage and accused him of failing to lead state governments in a national response and a lack of action to empower consumer watchdogs to deal with the potential for profit and service centers.
“The government a few weeks ago made a big song and dance about giving extra powers to the (Australian Competition and Consumer Commission) to deal with bullying. Where is that legislation?,” asked opposition energy spokesman Dan Tehan.
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Mike Foley is the climate and energy columnist for The Age and The Sydney Morning Herald.Connect through email address.
Nick Toscano is a business reporter for The Age and the Sydney Morning Herald.Connect through X or email address.
