Australia imported 79% of the refined petroleum it consumed in 2023–24, and more than 95% of its urea fertiliser comes from overseas suppliers. These aren’t abstract trade statistics — they represent direct exposure to supply shocks that can spike costs or delay deliveries within days. When 60% of fuel imports arrive from just three countries — South Korea, Singapore, and Malaysia — and 64% of urea comes from Gulf states, the concentration becomes a business risk that sits on every director’s desk whether they have mapped it or not.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The 2026–27 Budget allocated $7.5 billion to allow Export Finance Australia to underwrite fuel and fertiliser cargoes as part of a new Strategic Reserve function, and $3.2 billion for a 1 billion litre diesel and aviation reserve. Those are substantial sums, but they respond to a structural problem that has been building for years. Two Australian refineries — Kwinana and Altona — closed between 2020 and 2021, converting to import terminals because they could not compete with cheaper overseas product.
What this means for a business owner is straightforward: your input costs, delivery timelines, and ability to operate during a supply disruption are tied to shipping lanes and geopolitical events half a world away. Understanding where that dependency sits and what you can actually do about it is the difference between reacting and planning. For a broader view of how this dynamic affects business growth, I’ve covered the wider picture in a separate piece on excessive dependency on imports hurting Australian business growth. Here’s what you actually need to know.
Four Key Takeaways About Import Dependency in Australia
When I talk about import dependency in this context, I mean the share of a critical input that a country or business relies on from foreign suppliers — and the concentration of those suppliers across regions. A high dependency ratio combined with a narrow set of source countries creates a structural vulnerability that no amount of efficient logistics can fix on its own.
What Excessive Import Dependency Actually Costs Australian Businesses
The financial impact of import dependency is not hypothetical. When the Israel-Iran conflict erupted in June 2025, granular urea prices jumped from around A$737 per tonne to between A$855 and A$875 per tonne fca Geelong within a week. That 16% increase flowed directly into farm input costs during the peak winter crop preparation window — a period when switching suppliers or delaying application is not a realistic option.
Fuel prices tell a similar story. With 79% of refined petroleum coming from overseas and the Middle East supplying 70% of the crude oil processed by South Korea and Singapore (Australia’s top two fuel sources), any disruption in the Strait of Hormuz — which carried 34% of global crude oil traffic in 2025 — ripples through to Australian diesel and petrol prices within weeks. The supply disruption timeline framework from the research shows that physical shortages at major distribution ports typically emerge in weeks 3–4 after a disruption event, and alternative sourcing premiums climb to 15–25% above baseline by months 2–3.
For businesses that rely on diesel for transport, refrigeration, or on-site equipment, or on urea for cropping, the cost is not just the price premium. It is the uncertainty of whether supply will be available at all during critical operating windows. That uncertainty affects contract pricing, forward planning, and the ability to deliver on customer commitments.
Three Common Mistakes in Managing Import-Dependent Supply Chains
Treating one source region as enough
The most common error I see is assuming that a reliable supplier relationship is the same as a resilient supply chain. Australia’s urea supply chain illustrates the problem clearly: 64% of imports come from Gulf states, with China at 15% and Southeast Asia at 10%. That single-region concentration means that any disruption in the Middle East — whether conflict, port closures, or shipping lane blockages — directly affects 2.43 million tonnes of urea annually. The Strait of Hormuz is the critical chokepoint here, and approximately 21% of globally traded oil passes through it. Fertiliser shipments from Gulf producers rely on the same route. A business that has not mapped where its inputs actually originate — not just the supplier name, but the source country and transit route — is flying blind.
Running supply chains without buffer capacity
Australian businesses have largely operated on just-in-time inventory models, and that works well when global supply chains are stable. But the research shows that the supply disruption timeline moves fast: weeks 1–2 bring price volatility, weeks 3–4 bring physical shortages at major distribution ports, and by months 2–3 alternative sourcing premiums hit 15–25% above baseline. A business without buffer stock during that window faces either paying the premium or slowing operations. The cost of holding buffer inventory needs to be weighed against the cost of not having it — and the research suggests the balance has shifted. Getting advice on supply chain contracts and risk allocation can help clarify where the liability lands when disruptions occur.
Overlooking early warning signs in global markets
Geopolitical risk is not a separate category from business risk — it is a direct input to cost and availability. The June 2025 price surge was not random; it followed a specific conflict that had been building for months. Yet many businesses do not monitor the indicators that matter: shipping lane chokepoints, regional production concentrations, and export policy changes in supplier countries. China’s position as a secondary nitrogen supplier (15% of Australia’s urea imports) creates additional vulnerability because Chinese export controls can shift without warning. The table below compares the main import dependency categories and their associated risks.
→ Scroll right to see all columns
| Category | Import dependency | Top source region | Key risk |
|---|---|---|---|
| Refined petroleum | 79% | South Korea, Singapore, Malaysia (60% combined) | Strait of Hormuz chokepoint; 70% of crude for those countries comes from the Middle East |
| Urea fertiliser | >95% | Gulf states (64%) | Single-region concentration; Iran accounts for ~25% of Middle East exports |
| Crude oil feedstock | 83% imported (17% domestic) | Middle East via Singapore and South Korea refineries | Australia exports its own light crude because refineries require heavier grades |
| Domestic refining | 20% of consumption | Geelong and Lytton only (Kwinana and Altona closed 2020–21) | Two refineries serve the entire country; supported by Fuel Security Service Payment |
Practical Ways to Reduce Your Business Exposure to Import Disruptions
Map where your inputs actually come from
Start with the actual origin, not just the supplier name. If you buy diesel from a local distributor, trace it back to the refinery and then to the crude source. If you use urea, identify whether it comes from Gulf states, China, or Southeast Asia. The research shows that 60% of fuel imports come from three countries and 64% of urea from one region — so the concentration is real. A simple spreadsheet with source country, transit route, and estimated lead time gives you a baseline to work from. Once you know where the vulnerability sits, you can prioritise which inputs need alternative sourcing first.
Build relationships with alternative suppliers now
Diversification does not mean switching suppliers immediately. It means identifying and vetting alternatives before you need them. The supply disruption timeline shows that alternative sourcing premiums reach 15–25% above baseline by months 2–3 of a disruption, but those premiums are lower if you already have a relationship in place. For urea, the alternatives are China (15% of current imports), Southeast Asia (10%), and other regions (11%). For fuel, the diversification options are more limited because of Australia’s specific refinery requirements, but monitoring the development of the Fuel Security Reserve and engaging with industry bodies on supply allocation can help. Reviewing supplier contracts with a legal perspective can also clarify your rights if a supplier cannot deliver due to force majeure.
Watch emerging domestic production and government reserves
The 2026–27 Budget allocated $3.2 billion for a 1 billion litre diesel and aviation Fuel Security Reserve, with a focus on regional stockouts and essential users during supply crises. The government-owned reserve is still under development, and how it will operate — including whether the government will build and own storage facilities or engage with existing operators — is subject to consultation. Separately, the $7.5 billion EFA Strategic Reserve function has already underwritten approximately 600 million litres of diesel and 100 million litres of jet fuel as of mid-2026. These are early-stage measures, but they signal a shift toward holding domestic buffer stocks. Businesses that rely on diesel for operations should track how the reserve will allocate supply during a crisis, and whether their sector qualifies as an essential user.
Understand the supply disruption timeline for your own planning
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1Weeks 1–2: Price volatility beginsForward contracts tighten as suppliers reassess risk. Spot prices rise. This is the window to secure pre-agreed alternative supply lines before physical shortages emerge.
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2Weeks 3–4: Physical shortages at major portsDistribution ports see reduced inflows. Businesses without buffer stock begin to ration or pay spot premiums. The cost of waiting starts to exceed the cost of holding inventory.
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3Months 2–3: Alternative sourcing premiums spikePremiums reach 15–25% above baseline for non-contracted supply. Suppliers outside the affected region adjust pricing to reflect increased demand. Seasonal impacts become unavoidable.
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4Month 4+: Operational delays beginFor agricultural inputs like urea, delays past the planting window directly reduce projected crop yields. For fuel, delivery delays affect equipment uptime and transport schedules.
Frequently Asked Questions About Import Dependency in Australia
What percentage of Australia’s fuel is imported? ▾
Which countries supply most of Australia’s imported fuel? ▾
How much urea does Australia import each year? ▾
What is the Australian Fuel Security Reserve? ▾
How fast can a supply disruption affect fuel or fertiliser prices? ▾
Can Australian businesses insure against import supply disruptions? ▾
Where Australia’s Import Resilience Strategy Is Heading
The 2026–27 Budget marks a shift in how the federal government treats import dependency — not as a trade policy issue, but as a national security and economic resilience concern. The $7.5 billion EFA Strategic Reserve function and the $3.2 billion Fuel Security Reserve are the most concrete steps taken in years, but they are early-stage and subject to ongoing development. The two remaining domestic refineries are supported by the Fuel Security Service Payment, which pays refiners during loss-making periods based on litres produced. That payment keeps the domestic capacity alive, but it does not expand it.
What tends to make sense here is watching the consultation processes around the Fuel Security Reserve. If the government decides to build and own storage facilities rather than contract with existing operators, the allocation rules for that reserve will determine which businesses get priority access during a crisis. For businesses that rely on diesel or aviation fuel, engaging with industry bodies on those allocation rules now — rather than during a disruption — is worth the time.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read facing global competition — strategies for Australian enterprises.
Sources and Further Reading
Excessive dependency on imports hurts Australian business growth — A broader look at how import reliance affects domestic business development and competitiveness.
The financial burden of environmental regulations on Aussie firms — How compliance costs interact with supply chain pressures for Australian businesses.
Parliament of Australia (2026). Australia’s liquid fuel security: Budget update. 🔗
Parliamentary Research (2026). Australian urea supply risk threatens farm operations. 🔗
Department of Climate Change, Energy, the Environment and Water (2026). Australian Petroleum Statistics. 🔗
