While the company didn\u2019t model the Strait of Hormuz\u2019s potential closure \u2013 it instead focused on what would happen if supply from North Asia was cut off \u2013 \u00a0the exercise nonetheless ensured Z was already aware of how such a disruption would affect New Zealand\u2019s fuel supplies.<\/p>\n
Amid all the noise associated with the war, Hughes and his team (along with the Trading team in Singapore from Z\u2019s parent company Ampol) have focused on three main factors: the state of play in the Strait itself, how the Asian refineries have adjusted their production rates, and what steps individual countries are taking to safeguard their own stocks.<\/p>\n
![\"Strait](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/05\/Strait-of-Hormuz-fuel-flow-.png\")
The Strait of Hormuz is a critical route for Middle East fuel exports, with disruption there rippling through Asian refineries and global supply chains. Image: Supplied<\/p>\n
Hughes breaks down the Singapore relationship further. \u201cPeople sometimes don\u2019t realise just how physical it all is. As we are an import-only fuel system our trading team in Singapore is constantly buying refined products \u2013 that\u2019s your diesel, petrol and jet fuels \u2013 from Asian refineries and scheduling cargoes weeks and months in advance.<\/p>\n
\u201cWhen they\u2019re ready, those cargoes get loaded onto ships and make their way down here, and then the team is coordinating arrivals across multiple ports \u2013 Marsden Point, Tauranga, Wellington, Lyttelton, the list goes on \u2013 wherever there\u2019s storage and demand. Once it\u2019s here, it\u2019s about getting it off the ships and to our terminals.<\/p>\n
\u201cSo, when something like the Strait is disrupted, it\u2019s not abstract \u2013 we can feel it ripple through the supply chain almost immediately.\u201d<\/p>\n
A number of refineries did have to cut back their production \u2013 but that (for the most part) had the desired effect, with scarce supplies pushing up global prices, which in turn incentivised the release of more crude oil into the market to \u201crebalance the system\u201d.<\/p>\n
What did surprise Hughes was just how sharply prices went up \u2013 \u201calmost vertical\u201d, much more pronounced than following Russia\u2019s 2022 invasion of Ukraine.<\/p>\n
While the Russian invasion disrupted access to roughly 10 percent of the world\u2019s crude oil, about twice as much has been affected by the Strait of Hormuz closure. In addition, Asian refineries have been specifically set up to process the heavier crude oil that originates from the Middle East, rather than the lighter variants that are found elsewhere.<\/p>\n
There were some hairy moments early on, particularly in the spot market with limited fuel available for purchase, although long-term supply arrangements which Z, through the Trading team in Singapore, has in place with refineries remained intact. This eased as refineries ramped up their production.<\/p>\n
As for fears about countries hoarding fuel, while some nations like Thailand and China have put restrictions on exports, Hughes says others like South Korea have released government stocks into the market to act as a \u201cshock absorber\u201d.<\/p>\n
Z has shock absorbers of its own, in the form of pre-arranged protocols for responding to major events like a natural disaster or supply crisis. Hughes says the company\u2019s business units have their own emergency management teams, overseen by a separate group of senior leaders, allowing staff to override standard operating practices where needed.<\/p>\n
\u201cBasically what we\u2019re trying to do is, in regular periods of time, understand what\u2019s happening and enable the organisation to make quick decisions such that it can minimise the risks that it\u2019s facing.\u201d<\/p>\n
Z develops emergency scenarios and practises its response once a year, while the protocols were put to real-world use in 2017 when a digger cracked the pipeline bringing fuel from Marsden Point to Auckland and caused a rupture, with reports suggesting it led to the cancellation of more than 100 flights at Auckland Airport and caused some petrol stations to run out of fuel.<\/p>\n
Hughes is \u201csuper proud\u201d of the company\u2019s work to keep fuel flowing to Kiwi, saying it proves the resilience of New Zealand\u2019s import-only model following the closure of the Marsden Point oil refinery in 2021.<\/p>\n
But he is also conscious that New Zealand, and the wider world, is not yet out of the woods, with ongoing uncertainty over access to the Strait of Hormuz.<\/p>\n
Z is already thinking about how to move to the next phase of its emergency response, and about how the ongoing crisis could reshape the organisation and the wider industry; by way of illustration, Hughes cites the global oil crisis of 1973 that sparked the creation of the International Energy Agency.<\/p>\n
He is also thinking about whether to update the company\u2019s fuel security scenario planning, even though it has held up well in light of the year\u2019s events.<\/p>\n
\u201cAt one level, I\u2019m saying, \u2018Well, it\u2019s actually responded fine, and at one level, we\u2019re going okay\u2019, but is that good enough if you\u2019re a geographically isolated country at the bottom of the world? Is it what we want, and does it prompt some wider changes?\u201d<\/p>\n
That desire to keep supply chain planning as current as possible is just one sign of how seriously Hughes and Z take their role in ensuring New Zealanders have access to the fuel that is critical to their economic and social wellbeing.<\/p>\n
\u201cWe\u2019ve been able to maintain supply, and it\u2019s not lost on me that in doing that, we\u2019ve been buying product in a very volatile market, and that volatile pricing is being passed on to mums and dads and consumers and businesses, and that\u2019s having an impact.<\/p>\n
\u201cIt\u2019s one thing to sit here and go talk about supply chain dynamics and all that stuff \u2013 the outcome of all of this is that it has had an impact on people. It\u2019s a huge responsibility to ensure that product still can come in and people can run their businesses and go about their lives, and we don\u2019t take that lightly.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"From a ruptured jet fuel pipeline to the Russian invasion of Ukraine and severe weather events like Cyclone…\n","protected":false},"author":2,"featured_media":429698,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,1667,1702,111,43,7439,139,69,113775,112,25438],"class_list":["post-429697","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-energy","tag-infrastructure","tag-new-zealand","tag-news","tag-newsroom-pro","tag-newzealand","tag-nz","tag-partner-content","tag-transport","tag-z"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/429697","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=429697"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/429697\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/429698"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=429697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=429697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=429697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}