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While announcements of incoming sanctions by the United States and EU had sent some fuel product prices higher since October, the impact of Australia adopting tougher measures would be much less significant, said one Australian fuel executive, since benchmark petrol and diesel prices were set globally and Australia was not a large enough market to make a major difference.
Local prices would “have to go up”, they said, but how and when any increase flowed through to motorists would most likely get “lost in the noise” of many other factors, like geopolitics, that affect the price of oil and fuels all the time.
Following the closures of ExxonMobil’s Altona refinery in Melbourne and BP’s Kwinana plant in Perth in 2021, just two local refineries remain: the Viva Energy-owned Geelong refinery and Ampol’s Lytton refinery in Brisbane. This has left Australia reliant on imports for about 90 per cent of its fuel needs.
AMP chief economist Shane Oliver said Indian refiners’ 10 per cent share of Australia’s fuel imports was significant in its size, but banning it “probably wouldn’t be enough to impact the price”.
“There could be a jolt before it settles back down again – a jolt would be 5¢ to 7¢,” he said. “Most people wouldn’t notice it within a monthly discounting cycle.”
Australia is considering whether to ban petrol and diesel imports from foreign refineries known to still be processing any Russian crude oil.Credit: Eddie Jim
Australian fuel prices go through cycles of varying durations, during which retailers progressively discount their fuel by a few cents each day to compete for customers, until prices bottom out and then rapidly rise again by up to 40¢ a litre.
Despite market jitters this year about the risk that fighting the Middle East may affect oil supplies, average fuel prices have remained relatively stable. The Saudi-led cartel of oil-producing countries, known as OPEC+, had been expanding output, keeping benchmark oil prices subdued, Oliver said.
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Peter Khoury, a spokesman for the NRMA, said he would be shocked if any new restrictions on Indian fuel cargoes had a noticeable impact on local drivers at the pump.
“I don’t think there would be much outrage if the government were to enforce harder sanctions,” he said. “We know that the Australian population is not supportive of Russia’s decision to invade, and the impact on our prices is likely to be negligible.”
Ukrainian ambassador Vasyl Myroshnychenko said buying petrol and diesel refined from Russian oil was not just an economic choice, but a moral one.
“The blood of Ukrainian men, women, and children stains the fuel that ends up in the tanks of Australian cars,” he wrote on social media last month.
Myroshnychenko this week stepped up calls for the Albanese government to immediately require three of the biggest Australian fuel suppliers – Ampol, BP and Viva – to guarantee that the products they were sourcing and importing were free of Russian oil.
In a statement, Viva said none of the crude oil it processed into fuels at its Geelong refinery came from Russia. About 1 per cent of its refined fuel imports were from India in the past year, and it had no Indian fuel imports scheduled to arrive, it said. “Our governance and risk management procedures ensure that we continually monitor and promptly adapt to any chances in sanctions regulations to maintain strict compliance,” Viva said.
Ampol and BP, however, declined to say whether or how much of their fuel came from Indian refiners. Ampol said it was in talks with suppliers and government officials about “levels of assurances and solutions” to ensure it continued to comply with laws and sanctions across its supply chains.
“Ampol remains deeply concerned about the ongoing situation in Ukraine and the profound impact it is having on Ukraine’s people,” a spokesperson said.
BP said it took compliance with sanctions and export controls seriously, and conducted appropriate checks on trading counterparties and the documents they used to demonstrate the origin of products.
Oil traders are reporting that Indian refiners are increasing purchases of crude oil from the Middle East for December and January deliveries as US and EU sanctions put them under mounting pressure to replace more of their Russian intake with alternative supplies. Reliance Industries, the owner of India’s giant Jamnagar refinery, which ships fuel to Australia, this week said it would stop using Russian crude oil for its exported products from December.
