As diesel from the Gulf and Russia dried up, Australia had to find new suppliers – at a cost
The US–Iran war has upended the diesel supply chain. Australia’s supply of diesel has held up, but it now leans on fewer suppliers and a longer, more fragile chain.
Australia relies heavily on diesel for freight, mining, and agriculture. The country is now the world's biggest importer of seaborne diesel, with around 28 billion litres imported in the previous year. As the US-Iran war rages, diesel becomes the most exposed export product for Persian Gulf refineries. Russia, previously the largest diesel exporter, saw its exports dwindle last year as Ukrainian drone strikes damaged its refineries.
The ongoing conflicts in the Middle East and Eastern Europe have not only driven up diesel prices but also led to a major shift in global buyers and suppliers. Since January 2025, my analysis of over 21,000 diesel shipments reveals this change. Gulf exports have largely vanished, and Russian exports have collapsed. The United States and Asia have stepped in to fill the gap. Two major suppliers, Iran and Russia, have seen their exports plummet.
In February, Iran closed the Strait of Hormuz, blocking most crude and diesel shipments through the Gulf. Saudi Arabia continued exporting diesel through its Red Sea refineries, but this lifeline is fragile due to recent drone strikes. Russia's diesel exports fell sharply in July as Ukrainian drone strikes crippled its refineries. By October, Russia supplied only 2% of diesel to global ports, down from 12% the previous year.
The US has largely filled the supply gap, becoming the world's top diesel exporter. Asian refineries, including India's, have seen their share of seaborne diesel deliveries rise, with almost 40% of diesel imports coming from Asia in October. The Gulf's share of this market has fallen from 44% to 24%. Europe has also changed, with India and Saudi Arabia now the largest diesel suppliers.
China has emerged as a significant supplier to Singapore, providing almost half of the city-state's diesel imports in October, up from about 12% before the war. Asian refineries have had to alter their crude oil suppliers to maintain operations. Before the war, 57% of Asia's seaborne crude came from the Middle East, but this share has fallen to about 40%.
Australia, which buys almost 8% of all diesel traded by sea, has witnessed these shifts. Despite the rapid changes in suppliers, diesel arrivals to Australian ports have remained steady this year. Between March and October, around 488,000 barrels per day (78 million litres) of diesel have arrived. However, no diesel arrived from India since July, despite efforts to secure fuel supplies.
South Korea has become a significant supplier to Australia, supplying over a third of all South Korean diesel exports by October 2026. However, South Korean refineries rely heavily on Middle East crude, and their supply chain is vulnerable. About 20% of South Korean crude is now imported from the US. If Middle Eastern supplies tighten or Korean refiners find better prices elsewhere, Australia will face the impact.
The US remains a major diesel supplier, but recent comments from President Trump about a possible diesel export ban have raised concerns about its reliability. The recently announced deal between the US and Russia, where Russia will supply 1.8 million tonnes of diesel to the US, is still uncertain. Australia has banned Russian oil imports since 2022, but this diesel might be diverted to other markets, potentially easing supply and price pressures here.
However, Australia remains vulnerable to further disruptions, and it is prudent to broaden suppliers and remain vigilant.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
