Fuel scarcity sparks market rethink, says Datt Capital CIO

The era of viewing fuel shortages as mere ‘blips’ in the cyclical nature of energy markets appears to be over. As of April 2026, the global and domestic energy landscapes have shifted into a state of structural fuel scarcity, a change that is forcing a radical rethink of investment strategy and government policy.

According to Emanuel Datt, Chief Investment Officer at Datt Capital, the current crisis is no longer a short-term headache but a persistent economic constraint. Blockades and restricted outputs are replacing the ‘just-in-time’ delivery models of the past decade with a gritty new reality.

A perfect storm of scarcity

The volatility isn’t limited to a single geography or commodity. While crude oil often dominates the headlines, the underlying rot is more widespread. Datt points to a convergence of geopolitical and industrial factors that have tightened the noose on global supply, cementing fuel scarcity as a medium-term fixture.

“The energy landscape is disrupted across multiple fronts. Fuel scarcity is probably here to stay for the medium term due to ongoing blockades, constrained refinery output, and export restrictions on key petroleum products,” he says.

Disruptions involving Qatar, a titan in the liquefied natural gas (LNG) space, provide further evidence of the fragility of the system. Given Qatar’s massive share of global exports, any hiccup in its output sends shockwaves through the entire energy complex, proving that the transition to ‘cleaner’ fuels is just as vulnerable to the pressures of fuel scarcity as traditional oil.

Australia’s Achilles’ heel: refining capacity

For local investors and advisors, the crisis has exposed a long-standing structural vulnerability: our inability to turn raw resources into usable fuel. Despite being a resource-rich nation, Australia remains precariously dependent on international refining hubs. This lack of sovereign capability has turned global fuel scarcity into a domestic emergency, particularly for diesel and jet fuel.

This vulnerability has forced a pivot in Federal Government policy. In a move that signals a departure from pure market-driven economics, the government has ramped-up support for domestic giants Ampol and Viva Energy.

The numbers tell the story of a government desperate to buffer against fuel scarcity. For Viva’s Geelong refinery, the federal government hiked the support trigger level from A$10.20 a barrel to A$15.90 a barrel refining margin. It also lifted the maximum support cap by a staggering 78 per cent, raising it to A$13 a barrel.

Datt suggests this is more than just a temporary subsidy; it is a fundamental shift in the national psyche.

“The situation demonstrates that energy security is not just a price-driven exercise. Australia is likely to pursue a more balanced approach between imports and domestic production over time.”

The policy pivot: hydrocarbons return to centre stage

Five years ago, the Australian policy conversation was dominated almost exclusively by the renewable transition. While the green energy push remains a long-term goal, the immediate necessity of physical supply amid chronic fuel scarcity has forced hydrocarbons back into the spotlight.

Recent government interventions, such as underwriting oil shipments and relaxing diesel standards, mark a significant departure from relying on market pricing mechanisms.

“This marks a notable shift in policy thinking. It speaks to the importance of hydrocarbons to a modern economy like Australia, in contrast to the current policy settings with the strong focus on renewables seen just five years ago,” says Datt. “While Australia remains resource-rich, the key challenge lies in converting upstream production into usable fuel for domestic consumption, an area likely to see increased policy attention.”

Earnings downgrades ahead

For advisers and institutional investors, the “fuel-as-a-constraint” model has immediate implications for the upcoming reporting season. Because fuel serves as a primary input for nearly every sector, fuel scarcity drives systemic inflationary pressure.

Datt is blunt about the fallout for the ASX: “Fuel is an input to almost everything. Higher energy prices will broadly increase the cost of doing business. We expect this to flow through in company announcements across the next reporting season. Sectors such as industrials, logistics, miners will have their profits disproportionately affected, whereas financial companies will be bit more insulated. However, I do expect there’ll be a consistent stream of earnings downgrades over the coming quarter.”

Portfolio positioning

In response to this ‘new normal’ of fuel scarcity, Datt Capital has adjusted its sails. The firm has shifted towards a greater weighting in energy exposures. The logic is simple: when supply is constrained and demand is inelastic, prices tend to stay higher for longer.

However, it isn’t a “buy everything” environment. Datt is keeping his powder dry, maintaining elevated cash levels in anticipation of broader market weakness triggered by these energy constraints.

“We have repositioned our portfolios towards a greater weighting towards energy exposures, because when energy becomes the constraint and demand remains relatively inelastic, we typically see stronger prices over the medium term. We are also maintaining elevated cash levels, anticipating potential market weakness and more attractive buying opportunities ahead.”

For the Australian market, the message from the Datt Capital CIO is clear: the transition isn’t just about moving to renewables; it’s about surviving the volatile reality of fuel scarcity in the interim. Energy security has officially trumped market efficiency.