Australia Jet Fuel Shortage and Estimated Flight Rationing - April 2026

Australia is facing its most severe aviation fuel crisis in modern history, triggered by the closure of the Strait of Hormuz following the US-Israeli military strikes on Iran in late February 2026. The country, which imports roughly 90% of its liquid fuel needs, now confronts the prospect of formal flight rationing within weeks as multiple Asian supplier nations restrict or ban fuel exports.

In mid-March 2026, Australia held approximately 29 to 32 days of jet fuel reserves, equivalent to around 802 million litres, according to the Department of Industry, Science and Resources. This stockpile includes fuel stored onshore at airport tank farms and on tanker ships within Australia's exclusive economic zone. The country consumes an estimated 25 to 28 million litres of jet fuel per day, and the supply chain is designed around continuous tanker deliveries rather than long-term strategic storage.

Australia's jet fuel import dependency is concentrated among a handful of Asian refineries that themselves rely heavily on Middle Eastern crude oil. In 2025, China supplied approximately 32% of Australia's jet fuel imports, totaling roughly 2.6 billion litres. Singapore and South Korea each contributed over one billion litres. Smaller but significant volumes came from Malaysia, Taiwan, and India. According to UN COMTRADE data, three countries alone (South Korea, Singapore, and Malaysia) account for 65% of all refined fuel imports into Australia, and approximately 59% of their collective crude oil intake transits through the Strait of Hormuz.

The situation has escalated rapidly since early March 2026. On 5 March, China instructed its refiners to halt signing new fuel export contracts and to attempt cancellation of committed shipments, as reduced crude oil flows from the Middle East forced Chinese refineries to cut throughput. At least two major Chinese refineries, including Zhejiang Petrochemical Corp, began reducing output. On 6 March, Thailand's Prime Minister signed an immediate ban on exports of gasoline, diesel, Jet A-1 aviation fuel, and LPG under emergency powers. India has informally redirected its refinery output toward domestic consumption. Vietnam, the Philippines, and other Southeast Asian nations have introduced their own conservation and restriction measures.

With only two domestic refineries remaining, Ampol Lytton in Brisbane (capacity 6.5 billion litres per year) and Viva Energy in Geelong (capacity 7.5 billion litres per year), Australia produces less than 20% of its total liquid fuel demand locally. Both refineries depend on imported crude oil, and the Ampol Lytton facility historically exported a portion of its output due to high sulphur content. The government temporarily relaxed fuel quality standards for 60 days on 13 March, allowing higher-sulphur petrol (50 ppm instead of 10 ppm) to be sold domestically, which is expected to add approximately 100 million litres per month. Emergency reserves totaling up to 762 million litres of petrol and diesel have also been released.

The impact on airlines is already visible. On 10 March, Qantas announced fare increases across its international network, citing jet fuel prices that had risen by up to 150% in two weeks. Flights to Europe are operating at over 90% capacity. The Perth-London route has added a fuel stop in Singapore. Air New Zealand has taken more drastic action, cutting approximately 1,100 flights between 16 March and early May, affecting 44,000 passengers. The airline's CEO stated that jet fuel, normally priced around US$85 per barrel, had doubled to approximately US$170, and the refining margin (crack spread) had spiked from US$22 to over US$115 per barrel. Fuel surcharges across Cathay Pacific, Thai Airways, and other Asia-Pacific carriers have risen by over 100% effective 18 March.

Under a scenario where the Strait of Hormuz remains blocked, China maintains its export suspension, and Thailand's ban persists, a supply analysis indicates the following approximate disruption to Australia's jet fuel pipeline. China (32% of imports) drops to zero. Singapore and South Korea (each roughly 13%) see capacity reduced by approximately 50% due to their own crude oil shortages, leaving around 6-7% each. Malaysia (about 10% of imports), which sources 75% of its crude via Hormuz, would be heavily reduced to roughly 3%. Taiwan, India, and other smaller suppliers would also contract. In total, only about 18-20% of normal import volumes could continue arriving. Combined with domestic refinery output of approximately 10-15% of total jet fuel consumption (factoring in the refineries' own crude import dependency), Australia could maintain roughly 30-35% of its normal jet fuel supply.

Based on this supply deficit, the estimated timeline unfolds in several phases.

During the first two weeks (mid to late March), cargoes already contracted for March continue arriving. Airlines implement surcharges and voluntary fare increases of 30% to 80% on long-haul routes. Flights are reduced by 5-10% through schedule consolidation.

During weeks three and four (early to mid-April), the Chinese export halt takes full effect on April shipments. Asian refineries operating at reduced capacity begin prioritizing domestic markets. Australian reserves fall toward 15-18 days. The government likely moves to active fuel management, with airlines reducing frequencies by 20-30%.

By weeks five to seven (mid-April to early May), reserves drop below 10 days, crossing the critical threshold. Formal flight rationing is expected, with the government imposing jet fuel allocations by airport. Commercial flights could be reduced by 40-60%, with priority given to defense, medical evacuation, essential freight, and limited international services.

Beyond eight weeks (May onward), if no resolution occurs, domestic Australian flights could be cut by 70% or more, with only a handful of international services maintained daily.

Flight prices have already surged dramatically. A round-trip economy ticket from Sydney to London, which cost approximately A$1,400 to A$1,500 in February, is now quoted at A$2,200 to A$2,700, an increase of roughly 80%. Cathay Pacific has listed business class return tickets from Sydney to London at A$39,577 for mid-April, compared to a normal range of A$4,000 to A$5,000. Economy one-way fares on some routes now exceed A$3,000. Over 46,000 flights were cancelled globally in the first two weeks of March alone, erasing an estimated 10% of worldwide airline capacity.

For comparison, during the COVID-19 pandemic in 2021, some London to Sydney seats reached A$38,000 when Australia imposed strict inbound passenger caps. Repatriation flights from South America cost A$5,500 for a one-way economy seat. The current crisis differs structurally: during COVID, borders were closed but fuel was cheap and abundant. Now, airports remain open but the fuel itself is becoming scarce. If rationing is imposed and seat availability collapses, fare spikes could potentially exceed COVID peaks on high-demand routes, particularly as insurance companies have declared the conflict a known event, limiting coverage for new bookings made after 1 March.

Australia does retain one strategic lever. As the world's second-largest exporter of liquefied natural gas, the country ships significant volumes to the same nations that supply its refined fuel, including South Korea and Japan. This gives the Australian government some negotiating power to secure priority fuel allocations through bilateral energy trade agreements. The International Energy Agency has also coordinated the release of 400 million barrels from member nations' strategic reserves, the largest such action in the agency's history.

The estimated onset of formal flight rationing in Australia under the combined Hormuz blockade, China export ban, and Thailand export ban scenario is approximately five to six weeks from the start of the disruption, placing it in mid to late April 2026.