The supply chain factors behind fuel tankers' extended offshore anchorage

THE SIGHT of fuel tankers sitting offshore for extended periods can look unusual from outside the industry, particularly when the vessels may be accruing significant costs while they wait. But the underlying supply-chain picture is more complicated.

In May 2026, the Australian government approved a $10 billion energy security package to protect against global supply disruptions and establish a fuel reserve capable of holding 1 billion litres of emergency fuel. The intention was to secure more fuel when the US-Iran war and the closure of the Strait of Hormuz triggered supply shortages from the Middle East.

The government also aims to boost total storage capacity to around 50 days of supply. Subsequently, it subsidised 16 extra diesel cargoes, roughly 795 million litres, and three jet-fuel cargoes. The implementation of the plan had significant implications for supply chain and logistics operations. It caused a short-term supply surplus, creating a temporary wholesale surplus and a logistical bottleneck.

Australia had not experienced an equivalent increase in demand or an increase in storage capacity, which may have contributed to fuel tankers sitting offshore for extended periods, in some cases for months without unloading. The situation raises questions about the level of supply chain and logistics infrastructure needed to ensure such a plan can be implemented effectively. Several factors may have played a role in why oil unloading was delayed and why tankers were left waiting offshore.

Supply and demand

When the US-Iran war started in February 2026, panic buying of oil was triggered over a short period, resulting in a surge in demand and supply shortages. However, this did not continue for long. Since March and April, the government has taken several actions to secure additional supply, which may have resulted in an oversupply of oil for a period. The result is a mismatch between additional supply and demand, with the downstream supply chain potentially not prepared to absorb the increased volume.

Limited storage capacity

Australia has limited storage infrastructure for holding oil. While the government is investing $3.2 billion to improve fuel reserves, establishing physical infrastructure takes time. This may create a lack of available storage capacity in the short term and contribute to tankers sitting offshore while they wait for storage to become available.

Coordination across the supply chain

Supply chains require effective coordination between different stakeholders to ensure operations run on time. Oil supply chains involve multiple but connected operations at domestic and international levels, including suppliers, refineries, shipping and ports, logistics and transportation, and the management of terminals and depots.

All parties need to work together to ensure fuel can move effectively through the different stages of the supply chain. A lack of coordination and preparation among the various parties could delay the flow at any point in the chain.

Logistics bottlenecks and planning

Logistics operations in the oil supply chain are substantial. Shipping, port, transportation and storage operations need to be managed together, while demand and supply also need to remain balanced to avoid over- or under-supply. A bottleneck in any one part of the operation can cause the flow to halt and result in waiting in preceding parts of the supply chain.

Decision-making should therefore involve all responsible partners to ensure that the different parts of the supply chain are ready to deal with additional supply. A lack of engagement by different parties in planning and decision-making could make implementation less effective and contribute to delays in the flow of fuel.

Building resilience into the fuel supply chain

The experience highlights the importance of collaboration between upstream and downstream supply chain and logistics parties when responding to potential fuel shortages. Logistics infrastructure, including storage, ports, shipping and transportation operations, needs to be developed and coordinated so that alternative supply plans can be effectively implemented.

The situation also demonstrates why supply chain and logistics factors need to be considered proactively when making decisions about fuel security. Building resilience is not simply about securing additional supply; it also requires the infrastructure and logistics capability to receive, store and distribute that supply when it arrives.