Refinery fire in Australia deepens Asia fuel supply crisis

Thursday 16 April 2026 - 12:00

By: Dakir Madiha

Refinery fire in Australia deepens Asia fuel supply crisis

A fire at a major Australian refinery has intensified fuel supply pressures across Asia, as regional markets already strain under disruptions linked to the Middle East conflict. At the same time, Japanese refiners are resorting to complex offshore oil transfers to secure crude supplies while avoiding high risk shipping routes near the Strait of Hormuz.

The supertanker Bright Horizon departed from anchorage near Mumbai on April 15 bound for the Japanese terminal of Kiire, according to maritime tracking data. The voyage reflects a growing pattern of ship to ship transfers, where large crude carriers meet intermediary vessels off the coasts of India and Malaysia to load Middle Eastern oil indirectly. Buyers are adopting these methods to bypass conflict zones while maintaining supply flows.

Japan’s refining sector is operating under mounting pressure. Refinery utilization fell to 67.8 percent in the week ending April 11, down sharply from around 80 percent before the escalation of tensions with Iran in late February. The country, which previously sourced about 95 percent of its crude from the Middle East, has accelerated diversification toward suppliers including the United States, Nigeria, Brazil, Angola, and Malaysia. Prime Minister Sanae Takaichi announced the release of additional strategic oil reserves, bringing total planned drawdowns to roughly 80 million barrels. Japan holds reserves equivalent to 254 days of imports. A separate $10 billion financial support package has also been unveiled to assist Southeast Asian countries facing rising energy costs.

The situation worsened after a fire broke out late on April 15 at the Geelong refinery in Victoria, one of only two operating refineries in Australia. Flames reportedly reached up to 60 meters after a gas leak ignited equipment in the gasoline production unit. Although the fire was contained by the morning of April 16, production of gasoline and aviation fuel is expected to be disrupted.

Australia’s heavy reliance on imports adds to the risk. The country sources about 80 percent of its fuel from abroad and was already dealing with supply disruptions tied to Middle East instability. Prime Minister Anthony Albanese said authorities would work with operators to restore operations as quickly as possible. Energy Minister Chris Bowen warned that production impacts could persist for an extended period, while industry representatives cautioned that prolonged outages could strain the country’s remaining refining capacity.