FAQ: Diesel, the Middle East Crisis & HVO - Prices, Supply and Reserves Explained
Australia is in the middle of one of the most significant diesel supply and price crises in a generation. This FAQ answers the questions businesses are asking most - from how we got here, to what it means for your operations, and what you can do about it.
For the full background on the recent price surge, read our original article: Diesel just jumped over 50% in 10 trading days - what it means for Australian businesses.
Where Does Australia's Diesel Come From?
Q. Where does Australia get its diesel?
A. Australia is almost entirely dependent on imported diesel. Most supply comes from refineries in South Korea, Singapore, Japan, Malaysia, India, Taiwan, and Brunei - all of which rely on crude oil shipped from the Middle East through the Strait of Hormuz. When that chokepoint is disrupted, the effect on Australian diesel prices and availability is direct and rapid. For official import data, updated monthly: Australian Petroleum Statistics - DCCEEW.
Q. Does Australia make its own diesel?
A. Yes, but only a fraction of national demand. Australia has two remaining operational refineries - Lytton (QLD) and Geelong (VIC) - which together cover less than 20% of national diesel consumption. The rest is imported. Australia has closed several major refineries since 2014, increasing its exposure to global supply chain disruptions. More on Australia's refining and fuel security policy: DCCEEW - Australia's Fuel Security.
Q. How much diesel does Australia use each day?
A. Australia consumes approximately 90 million litres of diesel per day, based on annual consumption of around 33 billion litres. Diesel powers freight and logistics, mining, construction, agriculture, and remote power generation. It is not a discretionary input - even short supply disruptions have outsized consequences for the economy. Track national petroleum consumption data: Australian Petroleum Statistics - DCCEEW | U.S. EIA - Australia Country Analysis.
The Three Dimensions of the Current Crisis - Price, Supply & Reserves
The March 2026 crisis involves three simultaneous pressures. Each matters differently for how businesses should respond.
| Price Shock Crude-linked | Brent ~US$103/bbl | Terminal gate ~263 c/L (as at 16 March 2026) Brent crude surged from US$71.66 to a peak of US$119.50/bbl following the 28 February Middle East conflict, before settling around US$103/bbl as at 16 March 2026. Australian terminal gate diesel prices reached approximately 263 to 264 c/L in Sydney, Melbourne, Brisbane and Adelaide (Ampol, Viva Energy and IOR averages, 14 to 16 March 2026). Retail prices continue tracking upward through the typical two-week lag. |
| Supply Risk Strait of Hormuz | Tanker traffic near-zero The Strait of Hormuz carries approximately 20 million barrels of oil per day, one-fifth of global supply. Traffic fell from 20 to 30 oil tankers per day to near-zero following the conflict. No alternative export route exists at equivalent volume. Australia's offshore Asian refineries rely on this crude flow. |
| Reserves Gap IEA standard: 90 days | Australia: approx. 34 days (est. 25 days onshore, as at 16 March 2026) Energy Minister Chris Bowen confirmed in Parliament on 2 March 2026 that Australia holds 34 days of diesel reserves, some of which may be aboard ships rather than held onshore. More recent estimates suggest the true onshore figure may be as low as 25 days. Australia has not met the IEA 90-day requirement since 2012. |
What's Happening with Diesel Prices and How Do I Track It?
Q. What is the current retail diesel price in Australia?
A. The national retail average was approximately 180 to 181 cents per litre in the week of 22 February 2026. By 8 March it had risen to around 196 to 197 c/L nationally, with the five-capital-city average reaching 194.9 c/L. By 14 to 16 March, terminal gate prices in major cities were tracking 263 to 264 c/L (Ampol, Viva Energy and IOR averages), with retail prices continuing to follow through the typical two-week lag.
⚠ Prices are moving daily. The figures above reflect mid-March 2026. Check live pricing via the resources below:
→ AIP Weekly Diesel Prices Report
→ ACCC Weekly Fuel Price Monitoring
→ PetrolMate - Live Retail Station Prices
→ GlobalPetrolPrices.com - Australia Diesel
→ U.S. EIA - Brent Crude Daily Spot Price
Q. Why is fossil diesel so directly tied to crude oil prices?
A. Fossil diesel is a refined product derived from crude oil. Australia's imports come from Asian refineries that source feedstock from Gulf State crude. This creates a direct price linkage between Middle East geopolitics and the price at Australian terminals - even though the diesel itself is refined in Asia. Supply constraints, refining margins, and freight rates all respond to the same underlying events. The ACCC publishes the relationship between wholesale (terminal gate) and retail pricing: ACCC Fuel Price Monitoring.
What Impact Does Diesel Volatility Have On Australian Businesses?
Q. How does this crisis affect transport, mining, and construction operators?
A. For businesses consuming tens or hundreds of thousands of litres per month, the 37 to 70+ c/L increase since late February represents an immediate and material cost impact. Beyond price, supply access is also becoming a constraint. Some fuel terminals and suppliers have begun prioritising contracted buyers over spot purchasers. Businesses relying on ad hoc fuel purchasing may find availability - not just cost - becoming an operational issue in the weeks ahead.
Q. Will prices fall once the situation stabilises?
A. Historically, when crude oil prices fall, Australian retail prices follow with a two-week lag - the same lag that has caused the current rises to arrive in waves rather than all at once. If the Strait of Hormuz reopens and crude falls, retail prices should ease accordingly. However, structural vulnerability remains: Australia's low reserves, near-total import dependency, and limited domestic refining capacity mean the next disruption - from this or any future conflict - will land just as hard.
What Impact Does Fossil Diesel Volatility Have on HVO Renewable Diesel?
Q. What is HVO and why is it relevant to the current crisis?
A. HVO (Hydrotreated Vegetable Oil), also called renewable diesel, is a drop-in replacement for fossil diesel that is chemically near-identical in performance, but manufactured from entirely different feedstocks: waste cooking oils, animal fats, and vegetable oils. Critically, it is not derived from crude oil - which means its pricing and supply chains are structurally disconnected from the volatility currently affecting fossil diesel markets.
⚠ Key point: The Strait of Hormuz is central to the global crude oil supply chain. It is largely irrelevant to the HVO supply chain. HVO feedstock is collected regionally, refined separately, and shipped through logistics networks currently unaffected by Gulf State disruptions.
Q. How does HVO pricing compare to fossil diesel right now?
A. Because HVO is not crude-oil derived, its price does not automatically follow crude oil benchmarks. When geopolitical events drive Brent crude from US$70 to US$119 in days, HVO pricing does not move in the same way - its inputs and production costs are independent of oil markets. This is one of the most significant practical arguments for HVO at the current moment: it is not just a sustainability choice, it is a supply security and price stability hedge.
Q. Why choose HVO over fossil diesel right now?
A. There are three practical reasons:
1. Price stability. HVO pricing is not directly linked to crude oil benchmarks. Businesses face far less exposure to geopolitical events in the Middle East when their fuel is not crude-oil derived.
2. Supply security. HVO sourced within the Asia-Pacific region - as RD2Go's supply is - uses feedstock collected and refined through separate logistics, unaffected by Hormuz Strait disruptions. Supply lines are currently open and unaffected.
3. Emissions reduction. HVO delivers up to 90% lifecycle greenhouse gas savings compared to fossil diesel, with a zero Scope 1 CO₂ combustion factor under the National Greenhouse Accounts (NGA) 2025. No engine modifications are required. For more on HVO's emissions profile, read: HVO and Carbon: How Renewable Diesel Reduces Emissions Across Every Scope.
Q. Is HVO available in Australia right now?
A. Yes. As of March 2026, RD2Go's HVO supply and shipping lines remain open and unaffected by the current Middle East conflict. HVO is available for delivery to every major capital city Sydney, Melbourne, Brisbane, Adelaide, and Perth, with other regions and regional areas available on enquiry.
For pricing, availability, or to discuss integrating HVO into your fuel procurement: Contact RD2Go or Book a call.
Summary: Fossil Diesel vs HVO in the Current Environment
| Factor | Fossil Diesel | HVO Renewable Diesel |
|---|---|---|
| Feedstock | Crude oil (Middle East origin) | Waste oils, fats, agricultural residues |
| Price exposure | Directly crude-linked - volatile | Independent of crude oil benchmarks |
| Supply chain | Exposed to Hormuz disruption | Asia-Pacific sourced - unaffected |
| Drop-in compatible | ✓ Baseline | ✓ Full drop-in, no modifications |
| Scope 1 CO₂ (NGA 2025) | ~2.7 kg CO₂-e per litre | Zero (biogenic carbon) |
| Lifecycle GHG | Baseline (100%) | Up to 90% reduction |
| Current availability | Subject to supply constraints | ✓ Available - RD2Go supply currently unaffected (as of 16 March 2026) |
Key Considerations for Diesel-Dependent Businesses
1. Review your procurement contracts now.
Spot purchasers are most vulnerable to both price spikes and supply prioritisation. If your business relies on ad hoc diesel purchasing, now is the time to explore contracted supply arrangements - whether for fossil diesel or HVO.
2. Understand the two-week price lag.
Wholesale prices move immediately when crude changes. Retail prices follow approximately two weeks later. If wholesale costs continue rising, retail will too - and vice versa. The ACCC publishes weekly updates during the current crisis: ACCC Weekly Fuel Price Monitoring.
3. Treat HVO as a supply chain hedge, not just a sustainability initiative.
The structural case for HVO - independent feedstock, independent supply chain, no crude-price linkage - is as strong right now as the sustainability case. For businesses thinking about operational resilience, not just emissions, HVO deserves serious consideration.
4. Monitor reserve and policy developments.
Australia's fuel security position is under active review. The government has authorised a five-day release of diesel reserves and is working with industry on supply continuity. Policy changes could affect procurement obligations or incentives. Stay current via: DCCEEW - Fuel Security.
5. NGER reporters: HVO delivers immediate Scope 1 CO₂ elimination.
Under the National Greenhouse Accounts (NGA) Factors 2025, the Scope 1 CO₂ combustion factor for HVO (paraffinic diesel) is zero. For NGER reporters, switching to HVO eliminates direct combustion CO₂ from day one - without carbon offsets. More: HVO and Carbon: How Renewable Diesel Reduces Emissions Across Every Scope
Related RD2Go Articles & HVO Information
→ Diesel Just Jumped 50% in 10 Days - What It Means For Australian Businesses
→ Fossil Diesel, Biodiesel, HVO & SAF: What's the Difference?
→ HVO and Carbon: How Renewable Diesel Reduces Emissions Across Every Scope
→ Renewable Diesel vs Fossil Diesel: What It Means For Emissions In Australia
→ Diesel, Dust and Deadlines: Mining's 2026 Diesel Compliance Guide
→ OEM HVO Approvals for Use in Engines, Machinery, Trucks and Generators
Disclaimer: This article was published on March 16, 2026. Fuel price data sourced from EIA daily spot prices, ICE futures, AIP city averages (Sydney, Melbourne & Brisbane), Petrolmate, and Ampol, Viva Energy & IOR supplier averages. Reserve figures sourced from Australian Parliamentary Hansard (March 2, 2026). IBISWorld data used for supply dependency figures. Price lag methodology per ACCC. Figures are subject to change as market conditions evolve. This article is intended for general informational purposes only and does not constitute financial, procurement, or investment advice.