China's Fuel Export Ban Puts Asia Pacific Airlines Under Pressure as Australia Seeks Supplies

Australia Faces a Narrow Window to Replace Chinese Jet Fuel

China's halt to refined fuel exports, effective March 11, 2026, has put Australia's aviation industry under pressure, with Energy Minister Chris Bowen warning that shortages could emerge within a month unless replacement cargoes arrive. China supplied approximately 32% of Australia's imported jet fuel in 2025, making the loss of those deliveries a major challenge for airlines and airports.

As of March 18, at least two fuel shipments bound for Australian ports have been thrown into doubt following direct orders from China's National Development and Reform Commission to refiners. Beijing's restrictions cover gasoline, diesel and aviation fuel as it seeks to protect domestic supplies amid escalating conflict in the Middle East.

Australia holds approximately 802 million litres of jet fuel, equivalent to 29 to 32 days of supplies, according to the Department of Industry, Science and Resources. The country has virtually no domestic capacity to refine jet fuel, leaving its aviation sector heavily dependent on continued tanker deliveries from overseas.

Brent crude oil has climbed above $100 a barrel, while Asian refineries are struggling to replace crude supplies disrupted by the conflict. Australia therefore faces two problems at once: finding enough aviation fuel and paying sharply higher prices for what remains available.

The pressure is spreading across the Asia Pacific region. Vietnam has warned airlines to prepare for flight reductions from April, Air New Zealand has already cut 1,100 flights, and Qantas has indicated that passengers should expect higher fares. Export restrictions elsewhere in Asia are making the search for replacement fuel more difficult.

Australia's immediate task is to secure new cargoes before its limited buffer comes under strain. The wider challenge is a supply system built around frequent deliveries and cost efficiency, with little room to absorb a prolonged interruption caused by conflict or export bans.

Why Australia's Fuel Buffer Is So Thin

Australia's jet fuel stocks are held in storage facilities on land or aboard vessels within its exclusive economic zone, which extends from 22 to 370 kilometres from the coastline. The Department of Industry, Science and Resources put those reserves at 29 to 32 days in the middle of March.

Sydney Airport chief executive Scott Charlton has described a supply position of about 25 days. That airport figure sits alongside the department's national estimate and illustrates the limited time available to respond when expected deliveries become uncertain.

Sydney Airport, Australia's largest aviation hub, relies entirely on imported fuel and has no refinery operation at the airport to fall back on. Its storage facilities hold only a few weeks of inventory before another cargo is needed.

Australian airports use a continuous delivery system. Large fuel storage tanks feed pipelines and hydrant systems that supply aircraft, with fresh tanker cargoes replenishing stocks regularly. The system works while deliveries arrive on time, but an interruption can quickly reduce the fuel available for flights.

Australia has minimal fuel reserves and little domestic refining capability, the result of strategic decisions made over decades. Its aviation sector lacks the extensive underground storage or petroleum reserves held in salt caverns that provide a larger buffer in some other countries.

The current stocks meet Australia's minimum domestic obligations but fall far short of the International Energy Agency requirement for members to maintain 90 days of reserves. Australia has failed to meet that international standard for years, limiting both its own protection during a supply shock and its capacity to assist other countries.

Australia's dependence on emergency measures and diplomatic efforts is now being tested by one of its most serious fuel security challenges in decades. Even a shipment that remains available can become harder to obtain when other countries are seeking the same replacement supplies.

How the Restrictions Spread Across Asia

Thailand restricted exports of refined oil products, including jet fuel, on March 6, allowing deliveries only to Myanmar and Laos. China followed with its export halt on March 11. Together, those decisions have removed important sources of aviation fuel from a market already under pressure.

South Korea has limited exports to the levels recorded last year and is considering further restrictions. Refiners in India and Japan have become reluctant to issue new export tenders while assessing their own supply needs. A tender is a process through which a seller seeks bids for a shipment.

The sequence shows how quickly the disruption has moved from oil shipping routes to airline schedules:

• Late February: gasoline traded at $79.30 a barrel, before the subsequent price surge.
• March 6: Thailand banned refined oil exports except deliveries to Myanmar and Laos.
• March 11: China's ban on gasoline, diesel and aviation fuel exports took effect.
• Middle of March: Australia reported 29 to 32 days of jet fuel stocks, while Singapore jet fuel paper swaps traded at about $157 to $163 a barrel.
• March 18: Australia was seeking alternative cargoes, and Vietnamese airlines were preparing for possible reductions beginning in April.

Singapore, South Korea, Japan and India feature in efforts to find alternative supplies. Their ability to fill the gap is constrained by reduced fuel availability, pressure to protect domestic markets and uncertainty about future crude deliveries.

Vietnam Prepares for Fewer Flights in April

Vietnam imports more than two thirds of its jet fuel, with 60% of those imported supplies coming from China and Thailand. Restrictions in both countries have therefore placed a large share of its overseas supply at risk.

The Civil Aviation Authority of Vietnam has warned airlines to prepare for flight reductions beginning in April. Major fuel importers Petrolimex and Skypec told regulators that they could guarantee supplies only through March.

Skypec urged authorities to limit air transport to essential domestic routes if the conflict continues. The aviation authority also instructed airport operators to prepare extra parking space for aircraft that may be taken out of service if airlines reduce operations.

Vietnamese Foreign Minister Le Hoai Trung raised energy security directly with Chinese Foreign Minister Wang Yi during a meeting in Hanoi, requesting close coordination. Prime Minister Pham Minh Chinh also appealed to Thailand's ambassador for assistance.

Vietnamese authorities acknowledged in official documents that finding alternative suppliers was extremely difficult in current market conditions. They identified South Korea, Japan, Brunei and India as possible sources, while noting that domestic refineries were under pressure to give other petroleum products priority over jet fuel.

The documents also warned that securing fuel would not necessarily make every route affordable to operate. Soaring prices could make many services unprofitable, forcing airlines to reconsider schedules even when they can obtain enough fuel.

The Middle East Disruption Behind the Shortage

The conflict involving Iran, the United States, Israel and other regional actors has disrupted shipping through the Strait of Hormuz, the world's most critical oil transport route. Attacks on transport vessels have made journeys through the strait increasingly risky, prompting many shipping companies to avoid it.

Asian refineries depend heavily on crude arriving from the Middle East. China receives up to 90% of its crude oil from Middle Eastern sources, making interruptions to those shipments a major pressure on the fuel production network serving the region.

Fewer tankers are taking the route, while several Gulf refineries have shut down because of supply shortages or security concerns. Some of those refineries normally ship fuel to Asia and have ceased operations entirely since the war halted shipping through the strait.

Wood Mackenzie analysts estimate that the conflict could force Asian refineries to cut crude processing by as much as 6 million barrels a day. A cut in crude processing means a refinery turns less oil into usable products such as gasoline, diesel and jet fuel.

Asian fuel availability was therefore tightening even before export restrictions took effect. The bans add another constraint by keeping some of the fuel that is still being produced inside the countries where it is refined.

Australia's exposure extends beyond any single Chinese cargo. Its airports depend on international shipping routes, the amount of fuel refineries can produce and the willingness of exporting countries to continue selling abroad. Disruption at any of those stages can affect deliveries.

Fuel Prices Rise Faster Than Airlines Can Absorb

Singapore jet fuel paper swaps traded at approximately $157 to $163 a barrel in the middle of March, compared with around $92 before the conflict. Paper swaps are financial contracts linked to fuel prices, rather than physical cargoes, and the quoted levels show the sharp rise in the market's pricing of aviation fuel.

The increase from $92 to $157 is more than 70%. At $163, the rise is larger still, illustrating the scale of the additional cost confronting airlines as they seek supplies.

Diesel derivatives surged to $150 a barrel. Gasoline reached $139.80, up from $79.30 in late February. The pressure therefore extends across several fuels, increasing competition for refinery output and adding to the financial burden on importers.

Fuel is typically an airline's largest variable expense, meaning one of its biggest costs that changes with the amount it flies. A steep increase can make a service much more expensive to operate even when its aircraft, crews and passenger bookings remain unchanged.

Petrolimex and Skypec warned Vietnamese regulators that rising jet fuel costs were rapidly pushing them toward the limits of their credit lines. They asked banks to provide more flexible financing until market conditions return to normal.

Credit lines allow businesses to borrow up to an agreed limit. When each fuel purchase costs much more, that limit can be reached sooner. Similar financial pressure is building across the region as companies face higher inventory costs alongside uncertainty about whether future supplies will arrive.

Airlines Begin Changing Fares and Schedules

Qantas, Australia's largest airline and its biggest consumer of jet fuel, has indicated that passengers should expect fare increases to cover rising operating costs. As of March 18, it had not cancelled flights in response to the disruption.

Schedule reductions become more likely if supplies fail to arrive beyond March. Airlines then face a choice between maintaining services at sharply higher cost and reducing flights to match the fuel they can obtain.

Air New Zealand has already cut 1,100 flights from its schedule because of fuel prices and supply concerns. In Vietnam, Sun PhuQuoc Airways notified regulators that it would adjust schedules over the next one to three months because of fuel price volatility.

Sydney Airport chief executive Scott Charlton explained why the airport's approximately 25 days of supply depend on conditions far beyond Australia:

This means the reliability of that 25-day supply depends on international shipping lanes, global refining capacity and geopolitical stability. And when you look at the world today with conflict in the Middle East and growing tension across global energy markets you start to see why fuel security matters just as much as emissions.

Passengers face higher fares, possible fuel surcharges and the risk that less profitable flights will be cancelled or combined. Regional services using smaller aircraft are particularly vulnerable because they typically operate with thinner profit margins and have less room to absorb a sudden cost increase.

Vietnam's preparations for additional aircraft parking show the practical consequences of schedule cuts. Aircraft that are no longer flying still need somewhere to stand, making airport planning part of the response to the fuel squeeze.

Australia Releases Stocks and Relaxes Fuel Rules

Climate and Energy Minister Chris Bowen announced plans to release fuel from Australia's strategic reserve and relax quality standards for 60 days. Allowing fuel with higher sulfur levels is intended to increase domestic petrol supply by approximately 100 million litres a month.

The government also lowered mandatory stockpile requirements. Required diesel reserves were reduced from 2.7 billion litres to 2.2 billion litres, while petrol requirements fell from 1 billion litres to 700 million litres. Lowering those requirements allows more existing fuel to be made available for use.

Those measures address pressure across the fuel market, while aviation continues to depend on securing jet fuel cargoes. Australia's limited reserves make the timing of replacement deliveries central to the response.

Bowen also addressed parliament about panic buying, warning against unnecessary purchases and the resale of fuel at inflated prices:

I ask Australians, buy as much fuel as you need: no more, no less. I've seen people on Facebook marketplace filling up jerry cans, Bunnings running out of jerry cans, going on Facebook marketplace, selling fuel at inflated prices. That is un-Australian. It's dangerous. It shouldn't be done.

Resources Minister Madeleine King travelled to Japan for urgent discussions with international counterparts about fuel security and diversifying supplies. The talks seek alternative supply routes involving Japan, South Korea and Singapore, although those countries face their own export pressures and reduced availability.

King indicated that increasing supplies of critical minerals and rare earths would also be discussed. Her visit places the immediate search for fuel alongside broader concerns about the region's energy security.

Emergency Oil Releases Offer Limited Relief for Australia

The International Energy Agency ordered its members to release 400 million barrels of emergency oil reserves. The amount represents one third of global stockpiles and is much larger than the 182 million barrels released after Russia's invasion of Ukraine in 2022.

The new release is more than twice the 2022 amount, showing the scale of the international response. Emergency reserves provide additional oil during a disruption, while airlines still need refiners and shipping networks to deliver usable aviation fuel.

Australia cannot participate fully in that coordinated response because it has failed to maintain the required 90 days of reserves. It is consequently dependent on bilateral arrangements, agreements made directly with other countries, rather than multilateral sharing mechanisms involving several members.

The national jet fuel buffer of 29 to 32 days leaves little room for a prolonged interruption. Government stock releases and diplomatic discussions can help manage the pressure, but continued arrivals of replacement cargoes remain essential to maintaining airline operations.

The Next Few Weeks Will Test Fuel Deliveries

Replacement cargoes had not been confirmed for all threatened deliveries as of March 18. The immediate question for airports and airlines is whether enough fuel will arrive before existing stocks come under severe pressure.

In a more manageable scenario, cargoes from Singapore, South Korea and India arrive steadily, allowing flight schedules to continue while prices settle at higher but sustainable levels. The aviation sector would still face increased costs, with passengers paying more to travel.

Persistent shipping delays or further export restrictions could instead create local fuel constraints at major Australian airports. Authorities would likely give priority to emergency and military flights, while commercial airlines could be required to reduce operations and face fuel rationing.

Any interruption lasting more than a few weeks could push Australia toward those emergency measures. Vietnam's warning about reductions beginning in April, and Sun PhuQuoc Airways' planned adjustments over one to three months, identify the next period when the pressure may become more visible to travellers.

The crisis connects decisions made at refineries and shipping routes overseas with departures at local airports. Australia's limited storage buffer, Vietnam's reliance on China and Thailand, and rising fuel prices across the region leave airlines managing both the risk of missing supplies and the cost of continuing to fly.

The Essentials

• China halted gasoline, diesel and aviation fuel exports on March 11, 2026. It supplied approximately 32% of Australia's imported jet fuel in 2025.
• Australia held approximately 802 million litres of jet fuel, equivalent to 29 to 32 days of supplies, in the middle of March.
• Chris Bowen warned that shortages could emerge within a month unless replacement cargoes arrive.
• Thailand restricted refined fuel exports on March 6, while South Korea capped exports at last year's levels and considered further curbs.
• Vietnam's major importers guaranteed fuel only through March, and its aviation authority warned airlines to prepare for reductions from April.
• Singapore jet fuel paper swaps reached about $157 to $163 a barrel, compared with around $92 before the conflict.
• Qantas signalled higher fares, Air New Zealand cut 1,100 flights, and Sun PhuQuoc Airways planned schedule adjustments.
• Australia relaxed fuel quality rules, lowered required petrol and diesel stocks, and sought alternative supplies through diplomatic talks.
• The International Energy Agency ordered a release of 400 million barrels of emergency oil reserves, more than twice the 182 million barrels released in 2022.