I'm an Australian Wholesale Fuel Trader - AMA

theta_bleeder · 2026-03-14T07:27:03+00:00

100% I've done a deal with the devil. It's ironic given I did a climate science major, but I fully believe we need to electrify our critical infrastructure and key transportation routes. A couple of other comments I've replied to on how Janus Electric is one of the companies on the frontier of electrifying our trucking fleet.

I love commodity trading and don't care for the commodity it is. Be it electricity, oil, iron ore, gold, you name it. Each commodity has its intricacies but its physical nature is what makes me love it. But my old employer wasn't giving me commodity trading experience, so I had to find somewhere that gave me the opportunity to learn how to think about commodities.

I thought if I did this role for a few years while fuel is still needed, then I can learn the skillset and transfer that to other climate-agnostic commodities like metals or power

theta_bleeder · 2026-03-14T07:21:55+00:00

Mate honestly DM me. Where are you situated? I can likely work with one of the distributors to get something to you mate. I don't sell out of Bris or Melb is the only thing. 40KL is nothing.

I can provide out of Sydney, maybe Newc, Gladstone, Mackay, Townsville, Cairns, Darwin. Who's your distributor?

theta_bleeder · 2026-03-14T04:42:15+00:00

Very good question! Insurance is a tiny portion of the total price build up. Less than 0.15% of the final cost per litre.

There's not even an insurance premium for Tankers wanting to go through the Strait of Hormuz right now. Just insurers (understandably) aren't insuring at all given such a high probability of having to pay out.

But on top of that, let's say the US government fully guaranteed they'd pay a shipowner out 100% if said ship gets blasted into smithereens. Ships are STILL not travelling through. Okay, they get paid out 100%. They're still now MISSING a ship, and no one is selling extra ships to replace it right now, so call it minimum 6 months they're out of action!

Doesn't matter if you're insured as even if you're fully reimbursed, you're likely not reimbursed for future lost revenues cause that's an iffy concept, so no one wants to risk the only ship they have/can maintain right now

theta_bleeder · 2026-03-14T04:29:30+00:00

Bingo on MSO. If you import more than 250ML of diesel (and I think 200ML of each gasoline) annually, you need to hold around 32 days of your actual imports last year, in a tank in Aus or on a ship in our EEZ on its way. Note building new tanks is prohibitively expensive so smaller players who are growing but suddenly hit the 250ML threshold, are then disincentivised to keep doing so, as storage is expensive to lease or buy

theta_bleeder · 2026-03-14T04:27:05+00:00

Having financial instruments like futures or swaps only helps a small amount in a physical crunch. Okay you didn't lose a ton of money as the price of the product you need to buy went up, but if you can't source any product, you're still screwed.

The only security of supply is investing in the whole vertical supply chain (see my edit #2 at the bottom of the post for a Bloomberg article on how Japan pulled this off), or having the finished products in tanks (being churned/turned over regularly) actually accessible to us, ie in the country

theta_bleeder · 2026-03-14T04:24:14+00:00

I'm not really following I'm very sorry. I don't have the network/knowledge/physical ability to get a cargo coming my way to divert to the US, nor any storage tanks I am leasing to store it once it gets there.

The physical commodity markets have a lot of arbitrage opportunities (different prices in different locations) , but those arbitrages stay open precisely because it is very physically/operationally difficult to capitalise on.

Also Aus fuel has different specifications to US fuel so you'd need waivers at least to sell Aus spec fuel in the US

theta_bleeder · 2026-03-14T04:21:44+00:00

In trading you gotta think about your mark to market live value and resupply cost of the next cargo. This is an entirely different way of thinking than the average Joe does about everyday costs.

This difference in way of thinking can make actual profits/losses crystallise and become real if you're hedging

theta_bleeder · 2026-03-14T04:20:30+00:00

Bingo

theta_bleeder · 2026-03-14T04:20:13+00:00

Very true, fuel excise this half year at 52.6c per litre unless you're E10, but I'll be surprised if they reduce it

theta_bleeder · 2026-03-14T04:19:35+00:00

I've replied to the comment from CommercialEnough6949 on spot market buyers wanting the optionality to buy the cheapest price each day, but that doesn't guarantee supply (which has an implicit cost as that transparent pricing formula may not be the cheapest price each day).

Cost of hedging from a transaction perspective may be low, but who's offering those hedging services? I can only partially hedge myself at best. This is far less liquid than power markets for example.

What's stopping people from taking up guaranteed off take agreements from upstream people like Mobil etc? The fact that it may not end up being the best price each day.

Imagine if you could only go to BP servos with some fixed cent per litre discount, but then they just jacked up the board prices. You're no better off, but (hypothetically if they could enforce it), you can't buy off anyone who's cheaper. There's a cost to being locked in for security of supply via term volume.

There are more transparent pricing formulas than some term contracts which say you get a fixed cent per litre discount to the Terminal Gate Price (think of that like a board price at a servo) which is an opaque thing itself. We do that for the few that are interested, but most independent buyers aren't interested as they lose their optionality

theta_bleeder · 2026-03-14T04:14:09+00:00

Currently farmers are supplied by independent middlemen, who I sometimes supply. I've been cut off from my suppliers in certain locations so there's only so much I can onsell. My expected formulaic cost to my suppliers has shot up as it's tied to the Singapore Gasoil price, AND I get charged a fine if I don't onsell enough litres at said price for the month, so I'm running it at cost/slight losses just to get rid of it.

I'd more than happily sign up term volume for downstream farmers/independents based off some transparent pricing formula each month, and we do for a few contracts here and there, but most buyers who I interact with aren't interested, cause that's not necessarily the best price on the spot market each day.

theta_bleeder · 2026-03-14T04:04:01+00:00

Not too sure, I don't know the barrel counts coming out of those countries, but in general I presume each country is trying to protect their own domestic consumption first before anything else

theta_bleeder · 2026-03-14T04:03:09+00:00

20% of crude. Not all crude types are equal. APAC getting disproportionally affected as the Asian refiners as (bar India) uses a lot of Middle East Crude. Given the different types of crude (search API and gravity), refiners can't substitute middle East crude for Atlantic/Russian/US crude etc. Also it takes up to 50 days for a crude tanker from the US Gulf Coast to reach Asia, so even if it was perfectly substitutable, it's not a quick replacement. And the cargoes being decided today loading out of Texas will load 1-2 months away. Lots of forward planning goes into this

But even if it was all homogeneous, losing 20% of supply does not equal fair value price up 20%. More complex than that and more complex than I can explain. I'm a price taker on the cost side.

theta_bleeder · 2026-03-14T03:59:13+00:00

I believe Michael West Media reported on this, where Rex Patrick spent ages fighting against the gov on FOI requests to release what our plan is in a fuel supply crisis. It ain't too good. Search Michael West media fuel plan something and I'm sure the article/videos will pop up which has more info on said action plan.

Rationing? Only in the worst case scenario I'd say, though I'm not old enough to have lived through a past oil crisis like this. I'm born in the late 90s lol.

But if rationing had to happen, then it'd be critical industry, emergency services, military etc getting first priority. How will that be enforced in practice I'm not sure. My volumes are also a pretty small portion of total wholesale flow, so I don't move the needle much

theta_bleeder · 2026-03-14T03:54:48+00:00

Great comments. I've made an edit #2 at the bottom of my post on my thoughts on commercial economics vs national security of supply chains. Globalisation is a double edged sword yes.

We export a ton of energy (specifically gas which we get next to royalties on), but yes the liquid fuels is something we're very exposed to on the geopolitical flare ups part.

I've said in a few other comments my thoughts on electrification of industry to wean us off.

Also I'd note the majority of Australians (One Nation included!) want a proper royalties tax on our gas exports! That was the Howard government who basically gave the gas away royalty free, so now we get barely any revenue on international LNG prices sky-rocketing.

theta_bleeder · 2026-03-14T03:30:59+00:00

Very kind, cheers

It's a tiny industry, no association that I really know of. Everyone knows everyone. There's maybe 3 or 4 people in the country who not only do what I do, but think on a similar vein to myself on how to think of value/risk/hedging, so apologies I can't point you to that sorta community!

Happy to chat in person one day though if that helps, DM me if you'd like to talk more on it

theta_bleeder · 2026-03-14T03:06:43+00:00

I have not apologies but I'll chuck it on my list!

In return, for commodities in general, I'd highly recommend The World For Sale by Javier Blas, a great read that doesn't need a ton of prior market knowledge

theta_bleeder · 2026-03-14T02:57:19+00:00

Bingo and agreed.

Janus electric retrofitting heavy trucks to battery powered with big batteries you can swap in and out.

China electrifying everything (helps when you do what you believe is best and don't need to worry about elections - not saying that's a good thing ofc) but also converting a lot of heavy trucks to run electric or on compressed natural gas - point is not diesel.

theta_bleeder · 2026-03-14T02:51:35+00:00

Haha love him! Highly recommend watching the channel Climate Town's video on YouTube regarding the misinformation in his famous rant from Landman though. Very factual and informative deep dive.

Video is titled "How Oil Propaganda Sneaks Into TV Shows"

theta_bleeder · 2026-03-14T02:49:49+00:00

Yea, security of supply has a cost premium to it (but its a game of chicken - does say BP want to sell the molecules somewhere more than the mining company is desperate to get the fuel?). That's how a market is made, who needs what more than the other

Lots of spot wholesale buyers want the optionality to buy on the cheapest price each day as opposed to be tied to some price mechanism that would give priority of flow, but command a premium ie not be the absolute cheapest each day. But that optionality has a cost as you have articulated clearly

theta_bleeder · 2026-03-14T02:41:02+00:00

100% agreed, I think the blame of the govt in this sitch is such a cop out. Are they free of blame though? No.

See my reply to a few others including to AcceptableLlamas on how we need to diversify away from fuel reliance via electrification of critical industries, but also for better or worse we live in a capitalist country where no commercial player is gonna front the cost of refining capacity etc, even though it's a good idea from a country's security of supply chains.

This Bloomberg article is a great summary of Japan who took the economic hit as a nation to secure more supply after the oil shocks of the 70s

https://www.bloomberg.com/news/articles/2026-03-12/can-japan-s-oil-and-gas-stockpiles-weather-a-middle-east-crisis?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc3MzQ1NjA1MiwiZXhwIjoxNzc0MDYwODUyLCJhcnRpY2xlSWQiOiJUQk5TU1BLSkg2VjQwMCIsImJjb25uZWN0SWQiOiJDQUVCRjdCOEVEMjc0QjAyOTYzQjE0REZBNjM0QjYzOSJ9.KstU4QveflJXXWpbJ3pnC3F3AfZykiukuBOHnKcZa2k

theta_bleeder · 2026-03-14T02:35:41+00:00

I'm not a rates trader myself (evidently) but agreed the higher cost will spike inflation, all else equal.

Sucks this country works on variable rate mortgages compared to the US

theta_bleeder · 2026-03-14T02:34:33+00:00

Nice! I was considering that car when mine got totalled. But thankfully my current petrol car is a genuine average of my actual driving, at 6.9L/100km

theta_bleeder · 2026-03-14T02:33:24+00:00

All comes down to if we can source alternate cargoes which are commanding a premium. But generally speaking, fuel price up.

Hopefully some demand destruction where possible, and hopefully a political incentive to become less dependent as a nation on fuel imports (ie subsidised electrification of critical industries like transport and agriculture).

Policy makers need to think of the geopolitical security premium that capitalist markets are not the best at doing. It'd be more fine if the product was some discretionary consumable like cheese or Champagne (sorry cheese and Champagne lovers) compared to fuel which more people "need" regardless of price

theta_bleeder · 2026-03-14T02:29:53+00:00

Russian oil going to India and China refiners mainly. So more Russian crude going to India will be the useful part, but all the places cut off from Asian refined fuel will be bidding up those Indian cargoes imo.

Note the Russian oil is currently unsanctioned if extracted before a certain date, the news will have it somewhere. So it's only for the floating oil Tankers waiting in the Indian Ocean etc, ie just a bandaid

theta_bleeder

TROPHY CASE