Supply crunch hits Australian fuel distributors at east-coast ports

Independent Australian fuel distributors have been denied their usual volumes of petrol and diesel at key east-coast terminals, adding pressure to smaller service stations as the Middle East conflict stokes broader concerns about future supply.

The squeeze is hitting smaller distributors and other customers who rely on the spot market, where fuel is sourced on a day-to-day basis at current prices, as opposed to larger buyers with long-term supply contracts. Industry sources report that several smaller fuel firms have run into difficulty trying to secure their usual spot volumes of petrol and diesel from some importers at terminals in Sydney, Brisbane and Newcastle over the past week.

While these localised disruptions have not raised the likelihood of shortfalls emerging, and overall inventories remain stable, certain distributors have been notified they cannot draw the volumes they normally expect from key suppliers, raising concerns about tighter availability in the spot market.

Danny Kreutzer, managing director of Westlink Petroleum, confirmed he had been unable to draw his usual volumes from supplier United Petroleum.

“I am still getting some from United, but not what I would normally get,” he said, accepting that it was well within the supplier’s rights to make its own commercial decisions.

Westlink remained adequately supplied, added Kreutzer, as the company balanced its spot purchases with long-term supply contracts across a range of wholesalers to distribute to service stations in Queensland and northern NSW. He suggested that other distributors unhappy with the availability of uncontracted fuel should consider striking long-term supply agreements instead of relying solely on the spot market.

“United would be making sure they’ve got plenty for their own service stations,” he said. “All the others on the spot market might just have to sit and wait.”

United Petroleum chief executive David Szymczak said fuel was not being deliberately restricted, but confirmed that petrol supplies had become temporarily tighter in NSW because of the closure of a major terminal at Sydney’s Port Botany.

The terminal, run by infrastructure firm Vopak, has been undergoing planned maintenance works since Sunday night and was expected to be back online by 5pm on Friday, Szymczak said. He said there had been no changes to United Petroleum’s wholesale diesel availability or any other disruptions beyond those in Sydney.

“We made sure that we have got supply covering all of our service stations,” he said. If a customer wanted petrol from United in Port Botany, “they’ll just need to get it from a different terminal,” he said.

However, independent distributors are worried that reduced spot availability is creating unnecessary volatility and stoking concerns at a critical time.

Global oil prices have shot back above $US100 a barrel in the past week, as fighting has intensified again in the Middle East, and a major Saudi oil pipeline has been taken out of service. The national average price of regular unleaded was $2.16 a litre on Monday, up 39 per cent since July, according to figures from the National Roads and Motorists’ Association. The average diesel price was up 48 per cent from $1.79 to $2.65 a litre.

One small Australian fuel distributor, who asked to remain anonymous, confirmed he had been notified of wholesale fuel availability restrictions on the spot market, which he feared could create “uncertainty and a risk premium”. Another NSW distributor has encountered problems trying to source spot fuel at both Newcastle and Brisbane since late last week.

“We are having to bring in some fuel from Queensland into areas of NSW today that we would normally source from Newcastle, due to availability of supply,” they said.

Ben Clifton, managing director at Tamworth-based Transwest Fuels, said customers in the agriculture sector were becoming more worried about fuel availability and prices as the war in the Middle East continued with no clear end in sight.

He said the concerns underscored the need for governments to do more to protect farmers by investing in decentralised fuel storage in regional areas, not just coastal storage hubs. “We have broad-acre farmers thinking, ‘Do we just sit out this season and not plant a crop?’” he said.

A spokesperson for Energy Minister Chris Bowen said commercial decisions about fuel sales on the spot market were a matter for companies, but Australia’s fuel supplies remained secure.

“We continue to have more fuel in Australia than we did at the beginning of the war with 3.3 billion litres locked in to arrive in the next four weeks,” the spokesperson said.

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