A pipeline built across Saudi Arabia in the 1980s, originally so that Saudi oil exports could keep flowing if the Iran-Iraq tanker war closed the Strait of Hormuz, is now the unsung reason New Zealand drivers can still fill up. Four months into the closure of the strait, the East-West pipeline that runs from the Eastern Province across the Arabian Peninsula to the Red Sea port of Yanbu is pumping at its full seven million barrels a day. It is the single biggest reason the refineries in South Korea and Singapore that supply almost every drop of New Zealand’s petrol, diesel and jet fuel are still able to refine it.
Short answer for anyone who reads no further. Supply is holding, but every barrel is now taking the long way round.
Where our refined fuel comes from
New Zealand imports virtually all of its refined petrol, diesel and jet fuel since the Marsden Point refinery closed in 2022. Pre-crisis figures from the Ministry of Business, Innovation and Employment put South Korea at the top of the supplier list, followed by Singapore, with smaller volumes from Malaysia, Japan and, in normal times, China.
| Country | Pre-crisis share of NZ refined fuel | Main crude source for that refinery |
|---|---|---|
| South Korea | ~48% | Saudi Arabia, UAE, Kuwait, Iraq |
| Singapore | ~33% | Saudi Arabia, UAE, Russia, United States |
| Malaysia | Smaller but significant | Domestic, plus Saudi Arabia and UAE |
| Japan and China | Small balance | Middle East, various |
| Source: MBIE oil statistics | ||
That mix has shifted under the crisis. New Zealand currently holds about 38 days of fuel onshore, with the rest of its strategic reserve held in the United States, Japan and the United Kingdom under IEA stock arrangements. In early May, Prime Minister Christopher Luxon signed a first-of-its-kind essential supplies pact with Singapore, a binding agreement that Singapore will not impose export restrictions on fuel, food or medical supplies destined for New Zealand even in a future crisis.
Our fuel security is really refinery security
The refineries that ship product to Auckland do not produce crude oil themselves. South Korea has no domestic crude. Singapore has none. Malaysia produces about 350,000 barrels a day but consumes about 700,000, which makes it a net crude importer itself. Every drop of refined fuel arriving at Marsden Point or the country’s other import terminals started life as crude pulled out of the ground somewhere else, sailed through a chokepoint, and turned into petrol or diesel in a refinery whose operators have spent four months scrambling to find new crude to feed.
If those refineries lose their crude, New Zealand does not feel it for weeks. The voyage from Korea to Auckland is around sixteen to twenty-two days. Add loading and discharge cycles, the roughly three weeks of commercial stock the industry holds at the pump end, and the IEA-held stocks New Zealand can draw on offshore, and the realistic lag from a Korean crude shortage to a New Zealand pump shortage is closer to eight to twelve weeks. That is the buffer the country has been living off, and it is why the supply situation in the supplier countries is the question that actually matters.
Our three refined-fuel suppliers
South Korea
South Korea’s four big refining complexes, SK Energy at Ulsan, GS Caltex at Yeosu, S-Oil at Onsan and HD Hyundai Oilbank at Daesan, historically pulled around 70 per cent of their crude through Hormuz. By mid-April, according to Korea Times reporting, Korean refiners and the government had together secured about 273 million barrels of alternative crude for the rest of 2026. Around 250 million of those barrels are Saudi crude being loaded at Yanbu after the East-West pipeline transports it across the peninsula, and a further 24 million are coming from the UAE under a priority arrangement Seoul negotiated in March.
The rest of the gap has been filled by buying more crude from the Americas and Africa. South Korea has reduced its Middle East crude dependence from around 69 per cent before the crisis to around 56 per cent now. The trade-off is real but technical. Korean refineries are tuned for medium, sour Arab Gulf crude, and the sweeter, lighter barrels coming out of the Americas and West Africa produce more naphtha and less diesel per barrel through the same equipment. In an Asian market short of middle distillates, Korean refineries are running a slate that gives them less of the thing the region most needs. Newswire’s April deep dive on the Korean refinery crisis set out the geometry of that scramble in detail.
Singapore
Singapore’s response to the loss of Hormuz crude has rested heavily on India. Reliance Industries’ Jamnagar refinery in Gujarat is the largest refining complex in the world at around 1.4 million barrels a day, and it is one of the most slate-flexible plants on the planet. Indian refiners draw crude from around 40 countries, but that does not on its own mean the crude is non-Hormuz. A substantial share of Indian feedstock is still Saudi, Iraqi, Kuwaiti and UAE barrels, much of which still has to come out of the Gulf somehow. The genuine bypass barrels are Russian Urals routed via Suez or the Cape, and US crude. Reliance stopped Russian crude into its Special Economic Zone refinery in November to comply with EU sanctions that took effect in January, but its other units are still running it.
The practical effect is that India was able to lift its share of Singapore’s gasoil imports, gasoil being the trade name for diesel, to around 37 per cent in March, ahead of Russia and Malaysia. Singapore itself remains a powerful refining centre because of its scale, its bunkering trade and the diversity of crude it has always run. The May essential supplies pact with New Zealand reflects the fact that Singapore, more than any other supplier, has the spare capacity to keep New Zealand’s order book intact.
Malaysia
Malaysia is the smallest of the three but the most exposed. Petronas confirmed in early May that domestic crude supply was guaranteed only to the end of July, which means Malaysian refined exports are running closer to the bone than any other supplier in the chain. The sell-high, buy-low strategy that Petronas has used for years, exporting premium Malaysian crude and importing cheaper grades for domestic refining, depended on a functioning Hormuz market. With every Asian refiner now competing for the same non-Hormuz crude, Malaysia is paying more for the imported half of its slate and exporting less of the result.
The capacity limits of the workaround routes
The bypass routes around Hormuz are not a like-for-like replacement. Three of them matter:
- The Saudi East-West pipeline at its full seven million barrels a day, with effectively zero redundancy. A drone strike on Abqaiq in 2019 took out half of Saudi production for weeks. A strike on the pipeline or on Yanbu now would have nowhere to absorb the loss.
- The Habshan-Fujairah pipeline in the UAE at about 1.8 million barrels a day, running close to full.
- The Goreh-Jask pipeline in Iran, with a nameplate capacity of one million barrels a day but realistic throughput closer to 300,000.
That adds to around nine million barrels a day of nameplate capacity, but sustained real throughput is closer to six and a half to seven million. Hormuz, in normal times, carries about twenty million barrels a day. The gap of roughly thirteen million barrels a day of Gulf crude has nowhere else to go.
Then there is the Red Sea. Crude and refined product loaded at Yanbu still has to sail past the Bab-el-Mandeb strait at the southern end of the Red Sea, where Houthi attacks on shipping have made insurance markets nervous. War-risk premiums on tankers transiting either chokepoint are now around eight times pre-crisis levels, and several of the mutual P&I clubs that insure tanker liability have pulled cover for parts of the route. For a New Zealand-bound cargo loaded at Yanbu that means more cost, longer transit times, and a real possibility of cancellation at short notice. The binding constraint on supply to New Zealand is not really Korea, Singapore or Malaysia. It is the Red Sea.
What changed in May 2026
As of late May 2026, the situation has moved in three directions at once. On 4 May the United States launched a Navy escort mission to take merchant ships out of the Gulf. The operation was paused 48 hours later, after only two ships made the transit, to allow space for negotiations. Through the back end of May, Iran and the United States have, according to Reuters reporting, been working in Doha on a 14-point memorandum that would reopen Hormuz 30 days after a ceasefire takes effect. As of 17 May, only two vessels, about two per cent of the normal flow, transited the strait that day.
In Wellington, the government has finalised its Phase 4 fuel rationing plan, which would keep banks, schools and freight on uncapped supply if the crisis worsens while limiting general consumers. Channel Infrastructure, the listed company that has operated the Marsden Point fuel storage hub since the refinery’s 2022 closure, has lifted its full-year profit guidance to as much as $105 million on the back of crisis-driven demand for tank capacity, and $21.6 million of government money is now committed to topping up diesel reserves at the site before June.
What this means at the pump
The current answer to “is our fuel safe” is yes, with caveats. Korean and Singapore refineries are still getting the crude they need, mostly because a Saudi pipeline built for the 1980s tanker war has turned out to be exactly the asset the world needs forty years later. The Asian supplier countries have rewired their crude supply, the New Zealand government has Singapore locked into a binding pact, and the Marsden Point storage tanks are filling rather than emptying.
The watch items are not where most readers would guess. They are not in Wellington, and they are not even in Korea. They are at Bab-el-Mandeb, where the next significant Houthi strike on a Yanbu-loaded tanker would cascade up the cost of every barrel of crude flowing into Asian refineries, and at Malaysia, where the smallest supplier is running with the thinnest cover. The real timing question is whether the Doha negotiations produce a ceasefire before either of those two pressure points fails, or before the spare capacity in Channel Infrastructure’s diesel tanks runs out.
For now, the country is still drinking from a long straw. The straw is holding.
What do you think? Has the response from Wellington and our Asian fuel suppliers been quick enough, or are we still one Red Sea incident away from a real shortage? Comments are open below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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