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Today's Topics:
1. Australia and Japan face jet-fuel supply crunch (Stephen Loosley)
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Message: 1
Date: Wed, 01 Apr 2026 23:33:46 +1030
From: Stephen Loosley <[email protected]>
To: "link" <[email protected]>
Subject: [LINK] Australia and Japan face jet-fuel supply crunch
Message-ID: <[email protected]>
Content-Type: text/plain; charset="UTF-8"
Australia and Japan face jet fuel supply crunch as China cuts exports
Both Australia and Japan are heavily reliant on Chinese jet fuel, but shipments
have plunged in recent weeks amid the Iran war
By Kandy Wong Published: 3:22pm, 1 Apr 2026
https://www.scmp.com/economy/china-economy/article/3348642/australia-and-japan-face-jet-fuel-supply-crunch-china-cuts-exports
China?s exports of jet fuel have declined sharply in recent weeks amid the
US-Israel war on Iran, leaving countries including Australia and Japan facing a
supply crunch and scrambling to find alternative sellers.
China is Asia-Pacific?s largest jet fuel and kerosene exporter, but shipments
from the country fell nearly 40 per cent month on month in March to 204,000
barrels per day, figures from trade data provider Kpler showed.
The cutback is likely to hit hardest in Australia and Japan, which are both
heavily reliant on Chinese jet fuel, according to Kpler. Other countries
affected include Vietnam, Malaysia, the Philippines, Singapore, South Korea,
Canada and the United States.
Global jet fuel prices have roughly doubled since the start of the war, soaring
from US$99.40 per barrel during the last week of February to US$195.19 per
barrel last week, according to data from market intelligence firm Platts.
The spike is already being felt across the aviation industry. Passengers should
expect 8 to 15 per cent higher fares plus larger fuel surcharges, as well as a
decrease in flights as budget carriers cut routes, according to Osama Rizvi, a
global market and product strategist at market intelligence firm Primary Vision.
Scott Charlton, chief executive of Sydney Airport, warned in early March that
there were no guarantees that Australia?s airports would receive aviation fuel
the following month, as the country remained overreliant on overseas supplies.
Australian Transport Minister Catherine King and Energy Minister Chris Bowen
held talks with airlines including Qantas and Virgin Australia on March 12,
seeking to reassure them that fuel supplies would hold up.
?Australia will be able to source jet fuel from elsewhere, but it will be at a
cost,? said Michael Feller, co-founder and chief strategist at consulting firm
Geopolitical Strategy in Melbourne.
?Australia?s limited refining capabilities have proven a strategic weakness and
will be reflected in higher airfares and lower airline margins.?
With less than 30 days of reserves remaining, Australia is scrambling to source
jet fuel from South Korea, Taiwan, Singapore, Malaysia and India, but they are
dealing with their own supply constraints, according to Rizvi.
?Qantas is raising fares,? he said. ?If new tankers don?t arrive in April,
rationing is on the table, as we are already seeing in the Philippines.?
This week, the Australian government said that fuel imports were secured
through to the beginning of May.
Australia?s jet fuel flows fell 46 per cent year on year to 21,000 barrels per
day in March, Kpler?s figures showed. Japan was ?virtually? zeroed out, with
flows collapsing by 99 per cent year on year.
?The Philippines, Singapore, Canada and the United States all received
nothing,? said Zameer Yusof, senior lead research analyst of middle distillates
at Kpler. ?Vietnam and South Korea roughly halved.?
The impact on airlines would depend heavily on their hedging strategies, Yusof
said, but airlines were not fully protected because most hedging programmes
were linked to crude oil ? typically Brent ? rather than jet fuel itself.
?In normal times the two move roughly together so the gap is manageable,? he
added. ?Right now, the gap is blowing out because the shortage is specific to
jet fuel, not just crude.?
An airline can be 80 per cent hedged and still face a massive cost increase, as
its hedge does not cover the part of the price that is surging the most,
according to Yusof.
?We expect more fuel surcharges and capacity rationalisation from April, led by
Asia and the US, broadening globally by May as European hedge cover expires,?
he said, adding that fuel accounts for roughly one-quarter of airlines?
operating costs.
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