Farmers, miners hit by rising diesel costs

Tight domestic diesel supplies due to limited stockpiles and far-flung distribution networks are rattling Australia’s farming and mining sectors, the main users of the transport fuel, as the Iran war disrupts global oil supplies.

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An oil tanker sits at Viva Energy Australia's Gore Bay fuel terminal overlooking the city skyline in Sydney, Australia, on Wednesday.

(REUTERS)

With the war squeezing fuel availability, China banned exports of diesel, gasoline and jet fuel last week, heightening fears of fuel shortages. Australia, Bangladesh and the Philippines are especially reliant on Chinese fuel supply.

Australia holds stockpiles far below global standards and imported 84% of its petroleum product needs last year, government statistics show.

"Australian farmers and miners are competing in a global marketplace for refined product. We are entirely dependent on those imports," said CLSA analyst Baden Moore.

Given Australia's vast distances, diesel is critical for regional businesses and communities, but shortages are beginning to bite. Diesel stocks are down to 30 days, Energy Minister Chris Bowen said on Tuesday.

"There has been an unprecedented rush on fuel - especially by bulk customers wanting to secure diesel before the full price impact hits," said Malcolm Roberts, CEO of the Australian Institute of Petroleum. AIP's members include Mobil, BP, and Australia’s two refiners, Viva Energy and Ampol.