Australian fuel reserves and planned deliveries fall
Sydney (27 July)
Refiners have cut their planned fuel deliveries to Australia – and the country’s petrol, diesel, and jet fuel reserves have declined – over the last week, partly because of increasingly thin global oil inventories.
Ships carrying 3.1 billion litres of fuel will arrive in Australia over the next month, Energy Minister Chris Bowen told reporters on 25 July. Planned fuel deliveries are down from 3.2 billion litres a week ago.
Australia also has 42 days’ worth of petrol reserves, 38 days’ worth of diesel reserves, and 32 days’ worth of jet fuel reserves, Bowen added. Its fuel reserves are down from 46 days’ worth of petrol, 39 days’ worth of diesel, and 34 days’ worth of jet fuel a week ago.
Australia’s fuel reserves remain above pre-Iran war levels – despite the drop – because of Government-backed fuel purchases and supply assurances from six Asian trade partners. The Government will continue to work with refiners and trade partners to maintain confidence in Australia’s fuel supply, Bowen said.
But the Government may struggle to lift fuel import and reserve levels in the coming months. On 15 July, International Monetary Fund (IMF) staff reported that refiners drew down close to four million barrels/day of crude oil in March-May to offset disruptions around the Strait of Hormuz.
“Whenever [Hormuz] supply begins to recover, the [global] oil deficit will close only gradually, drawing inventories closer to operational minimums—the level below which the physical system itself begins to bind,” IMF Head of Commodities Jean-Marc Natal and IMF Mission Chief for Saudi Arabia Azim Sadikov wrote on the agency’s blog.
Crude oil producers and refiners have deployed spare capacity and drawn down inventories since the start of the US-Israeli war in Iran, Natal and Sadikov added.
Global oil supply challenges have driven up Australian fuel prices over the last week. Retail petrol and diesel prices in Australia’s five largest cities averaged A$1.80/barrel and A$2.15/barrel, respectively, on 22 July, up from A$1.70/litre and A$1.93/litre on 15 July.
Brent crude futures prices increased from $84.95/barrel (A$121.70/barrel) to $94.07/barrel over the same period, data from Trading Economics show. Brent crude futures last traded at $98.38/barrel on 24 July, before markets closed for the weekend.
By Avinash Govind