Australia refinery fire deepens fuel supply crisis

Viva Energy confirmed that petrol and aviation gasoline output will be affected, though it plans to meet demand through imports.

A fire at Australia’s largest oil refinery has worsened the country’s already fragile fuel supply situation, as global energy markets reel from the ongoing U.S.-Israel war on Iran.

The blaze broke out Wednesday night at Viva Energy’s 120,000 barrels-per-day refinery near Melbourne. State fire authorities said the fire was brought “under control” by Thursday afternoon, but production remains disrupted.

Critical timing for fuel security

Australia imports about 80 percent of its fuel, leaving it highly exposed to global shocks. The refinery supplies more than half of Victoria’s fuel and about 10 percent of national demand. Energy Minister Chris Bowen acknowledged the incident’s impact, saying, “This is not a positive development, but obviously there’s a long way to go in terms of working out just what the impact is.”

Viva Energy confirmed that petrol and aviation gasoline output will be affected, though it plans to meet demand through imports. Jet fuel and diesel production continues at reduced levels for safety reasons.

Market pressures mount

Analysts warn the fire could trigger price hikes. John Coyne of the Australian Strategic Policy Institute said, “I would expect we’d see a price hike depending on the scale of the damage, and secondly, it reinforces the challenges we have in terms of sovereign and resilient capabilities here.”

The incident coincides with Prime Minister Anthony Albanese’s regional tour to secure fuel supplies. On Thursday, he met Malaysian Prime Minister Anwar Ibrahim in Kuala Lumpur after similar visits to Singapore and Brunei. Both Malaysia and Brunei could boost production, but only within limits.

Pump prices likely to rise

Since the war began nearly seven weeks ago, fears of shortages have doubled demand in some areas, despite government assurances. Albanese previously announced temporary relief measures, including halving the fuel excise and suspending heavy road user charges for three months.

Tennant Reed of the Australian Industry Group warned, “It’s going to be a very bumpy and expensive few months.”

In March, the government committed to underwriting part of refiners’ fuel purchases. Albanese said in Malaysia that authorities would work with Viva Energy to restore production quickly. Reed noted that even if Australia secures additional imports, it could take weeks for cargoes to arrive.

Production at minimum rates

Viva Energy CEO Scott Wyatt said the priority remains extinguishing the fire fully before assessing damage. “All the other units are still operating and still in production but they are at minimum rates to maintain safety across the site,” he explained. “We’ll only start increasing production again once we’re confident that we can do that safely.”

No injuries have been reported, and the cause of the blaze remains under investigation. Viva’s shares are on trading halt pending an update.

The refinery fire underscores Australia’s vulnerability to global energy shocks and highlights the urgency of building more resilient fuel infrastructure as geopolitical tensions continue to drive volatility.