Countries on the hunt for new sources of oil | 7.30

Added: 2026-05-06

[00:00:02]This is the lifeline that Australia relies on to keep the nation moving. 90% of the liquid fuel we use, diesel, petrol, and jet fuel arrives on tankers like the Largo Eagle. And with the Straight of Hormuz effectively closed, suppliers have turned to unexpected locations to get the fuel they need.

[00:00:24]With the closure of the straight, one of the things that they had to do very early was to look where they can get their diesel should the straight not reopen. So, there's lots of different um sourcing going on at the moment. So, the whole market is in turmoil.

[00:00:38]>> Last week, the Largo Eagle unloaded 50 million L of diesel oil through the night in Melbourne. But its cargo didn't come from a refinery in Korea or Singapore. It came from Exxon's Baton Rouge refinery in Louisiana before the Iran War. Joe Clark from energy publisher Argus says fuel shipped on a month-long journey through the Panama Canal to Australia wouldn't make sense.

[00:01:03]It does now. Diesel that comes from the US or North America and then is shipped all the way into Australia is higher cost once it arrives in our region than uh diesel that comes say from Korea and is shipped down into Australia. We have seen people go out and over the last 3 months although it is now equalizing a bit. It has been cheaper to buy diesel in the US and ship it all the way through to Australia than it is to buy it in our region.

[00:01:33]Amidst fierce competition, extra shipments of diesel have been announced by Prime Minister Anthony Albanesei.

[00:01:40]>> I can announce that my government has secured an additional 100 million L combined a new additional uh 200 million L of diesel uh for use in Australia.

[00:01:57]Those announcements of extra diesel sound big, but they're considered in the context of huge numbers. Australia used 33.5 billion L of diesel oil in 2025. That's about 2.8 billion L a month or more than 91 million L of diesel a day.

[00:02:21]Every extra 100 million L of diesel to keep these trucks rolling is about a day of supply. The biggest source of Australia's diesel are the giant oil refineries of South Korea and now they are scrambling. Ru Wang Ho of the Korea Institute for International Economic Policy says before the Iran war up to 70% of the country's oil came from imports through the straight of Hormuz.

[00:02:48]It is hard for us to get oil from Middle East countries right now but also get a competition for securing oil from the outside of the Middle East countries. Uh it's getting severe. So Korea is looking for alternative sources but many other oil importers around the world are doing the same thing. So that's why it is so hard.

[00:03:13]>> It's not just Korea. In Japan, the arrival of an oil tanker from the US is worthy of news coverage. Matt Smith from Kepler Analytics said the world's oil trade route map is changing. So when we consider the closure of the straight of Hormuz, you've got 90% of the oil that gets exported through there goes into Asia. So now Asia is scrambling to be able to find barrels to replace that with. But what we're seeing is a lot of oil is being pulled from the US across to Asia. You're starting to see it from Latin America, West Africa, etc. And so it's basically from the Atlantic basin being pulled into Asia as a substitute for the loss of all these Middle Eastern barrels.

[00:03:54]>> Normally around 30 very large crude carriers or VLCC's, the biggest oil tankers are heading to the US to load crude. That number has more than doubled.

[00:04:06]>> What is happening? You've just got this armada. It's like almost like a train on the water of just all these unrelenting VLCC's heading to the US. They're loading up and then they're heading back in the opposite direction back to Asia.

[00:04:19]So you can't get a VCC through the Panama Canal. So they're having to go all the way around the Cape of Good Hope and then go to South Korea, Japan, China, etc. And so that takes the best part of two months as well. So here in lies the problem. It's not like you can suddenly just replace this Middle Eastern crude because there's a a huge time lag in terms of the the crude being loaded and getting there.

[00:04:42]>> Ru Pang Ho says for South Korea, securing crude imports is only part of the battle. The country's refineries are adapted to heavy oil from the Middle East. Lighter oil from other sources will reduce output. Even if refineries process the same similar amount of oil, I think they may end up producing like more lighter oil than before. So less diesel or less heavier products.

[00:05:09]>> South Korea's government has capped liquid fuel exports at 2025 levels. But Ru Hango believes Australia's supply of Korean diesel is secure. Even if Korea decide to use export controls in the future, u Korean refineries would likely to um prioritize Australia first and then continue export because Australia is the largest importer of Korea's petroleum products.

[00:05:40]But Matt Smith believes as long as the straight of Hormuz remains effectively closed, there will be more and more pressure on fuel deliveries around the world.

[00:05:51]>> The problem is is the situation really starts to deteriorate from here on out just because uh those supplies that were coming from the Middle East into Asia have dried up now. And so you are seeing those imports dropping off and you're seeing the exports of those products dropping off. And so you're going to be hearing more about these fuel shortages because we've been waiting for it to happen, waiting for it to happen. And it is in the next few weeks here where those tankers are just not able to load.

[00:06:16]Those tankers not going to be discharging into the countries where they typically do.