Asia-Pacific jet fuel supply crisis threatens Australia’s aviation industry due to Middle East conflict
Consensus Summary
Global jet fuel supply disruptions are threatening Australia’s aviation industry as Asia-Pacific nations prioritize domestic fuel needs amid the Middle East conflict. Australia relies heavily on foreign jet fuel—80% of its annual consumption—with China supplying a third and South Korea providing 18% of imports. Both countries have restricted or capped exports, with China’s monthly jet fuel shipments expected to halve in May and South Korea limiting exports to last year’s levels. The closure of the Strait of Hormuz in early March disrupted crude oil flows to Asia, exacerbating supply strains. While South Korea’s government denies redirecting jet fuel for domestic use, airlines like Eastar Jet and Asiana have canceled flights or entered emergency measures due to soaring costs. Vietnam, Japan, and the Philippines have also imposed fuel price hikes or flight restrictions. Experts warn shortages will persist through 2024, forcing airlines like Qantas and Virgin to raise prices or cut routes. Australia’s limited refining capacity and 30-day fuel reserve leave it vulnerable, prompting diplomatic efforts to secure alternative supplies, including potential natural gas-for-oil deals with China. The crisis reflects broader regional instability, with South-East Asia serving as an early warning for global aviation disruptions.
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Key details reported by multiple sources:
- Australia imports roughly 25% of its refined fuel from South Korea, including 18% of its total jet fuel imports (Guardian, ABC)
- China supplies about a third of Australia’s jet fuel and has reportedly restricted jet fuel exports (Guardian, ABC)
- South Korea refines Middle Eastern crude oil into petroleum products for export, making it a key fuel supplier to Australia (Guardian, ABC)
- Australia relies on foreign jet fuel for about 80% of its annual consumption (~10 billion litres) (Guardian, ABC)
- South Korea’s Ministry of Trade, Industry and Resources has not received any request to redirect jet fuel exports for domestic use (Guardian, ABC)
- South Korea has capped petroleum prices and limited exports of gasoline, diesel, and kerosene since March 13, excluding jet fuel so far (Guardian, ABC)
- South Korea imports ~70% of its crude oil via the Strait of Hormuz, which closed in early March (Guardian, ABC)
- China usually exports around 2 million tonnes of jet fuel monthly, with exports expected to drop to ~1 million tonnes in May (ABC only, but ABC cites Kpler data; Guardian mentions China’s restrictions but no specific tonnage)
- Australia has 30 days’ worth of jet fuel in reserve (ABC)
- Qantas and Virgin Australia have increased ticket prices due to soaring jet fuel costs (Guardian, ABC)
- Vietnam Airlines plans to cancel 23 routes per week starting this month (ABC)
- Eastar Jet (South Korea) plans to cancel 50 flights to Vietnam between early May and late May (Guardian, ABC)
Points of Difference
Details reported by only one source:
- South Korean transport ministry official stated ‘some domestic carriers’ had asked for export-bound jet fuel to be redirected to the domestic market (no specific airlines named) (Guardian)
- Chris Bowen (Australia’s energy minister) said Chinese jet fuel supplies were assured until late April or early May (Guardian)
- South Korea’s Ministry of Trade, Industry and Resources official explicitly denied receiving any request to redirect jet fuel exports (Guardian)
- South Korea’s government has not indicated whether it would declare a national energy emergency (Guardian)
- President Lee Jae Myung visited a strategic oil reserve facility on Thursday as part of the government’s response (Guardian)
- South Korea’s export restrictions on naphtha came into effect on Friday (Guardian)
- Korean Air declined to comment on whether it had made requests to the government, referring queries to the transport ministry (Guardian)
- Jeju Air (South Korea’s largest low-cost carrier) said it was responding to high fuel prices through stockpiling and efficiency measures, including introducing Boeing 737 MAX aircraft (Guardian)
- Asiana Airlines and T’way Air have implemented emergency management measures (Guardian)
- Air Premia (South Korea) is suspending 10 flights on US routes in May (Guardian)
- Australia sources roughly a quarter of its refined fuel imports from South Korea, including 18% of its total jet fuel imports (Guardian)
- Lurion de Mello (Macquarie University) said ‘in April, I think there’s going to be enough jet fuel coming in, but May is a bit of a concern’ (ABC)
- Zameer Yusof (Kpler) expects refinery run cuts totaling 2.7 million barrels per day as of April (ABC)
- Singapore has reached an agreement with Canberra to ensure the continued ‘flow of essential goods including petroleum oils’ (ABC)
- South Korea is capping jet fuel exports at the same level as last year (ABC)
- Korean Air announced to staff it was entering ‘emergency mode’ involving internal cost-reduction measures but no plans to ground flights (ABC)
- Fuel typically accounts for about 30% of Korean Air’s total costs, expected to more than double if current prices persist (ABC)
- Australia’s natural gas could be exchanged for refined oil products in bilateral deals with China (ABC)
- Reports suggest Australia’s prime minister may visit Singapore and Malaysia to shore up fuel supplies (ABC)
- Shipping data shows some ‘mixed fuel’ shipments from the US en route to Australia, potentially including jet fuel (ABC)
- Zameer Yusof warned the fuel crisis will continue for months, expecting it to last until the end of the year (ABC)
- South-East Asia is a ‘canary in the coal mine’ for Australia and the rest of the world (ABC)
Contradictions
Conflicting information between sources:
- The Guardian reports South Korean airlines (unnamed) have asked the government to redirect jet fuel exports domestically, while ABC states South Korea is capping jet fuel exports at last year’s level but has not received any such request
- The Guardian states China has already moved to restrict fuel exports, while ABC reports China usually exports 2 million tonnes monthly but expects this to drop to 1 million tonnes in May without explicitly stating a current restriction
- The Guardian mentions China’s jet fuel supplies are assured until late April or early May (Chris Bowen), but ABC does not provide a specific timeline for Chinese supply assurances
- The Guardian reports Eastar Jet plans to cancel 50 flights to Vietnam between early May and late May, while ABC states Vietnam Airlines plans to cancel 23 routes per week starting this month (no mention of Eastar Jet’s cancellations)
- The Guardian states South Korea’s Ministry of Trade, Industry and Resources has not received any request to redirect jet fuel exports, while ABC implies there is increasing domestic pressure that could lead to restrictions
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