When fuel management becomes a strategic blind spot

In the natural resources & energy and heavy industry sector, fuel is not a discretionary expense but a production dependency. When diesel supply tightens or prices spike, the consequences are immediate and tangible. Haul routes are remodeled, maintenance schedules are adjusted, contractors seek to renegotiate rates, and margins compress under pressure.

Recent geopolitical disruption and ongoing fragility in global oil and diesel supply chains have reinforced a hard reality for Australian industry. In short, our fortunes are tied to the stable supply of key globally traded inputs to production. According to the International Energy Agency (IEA), current conflict-driven disruptions represent the largest oil and refined products shock in modern history, with refined fuel markets such as diesel experiencing particularly acute volatility.

This is not a temporary inconvenience to be absorbed and managed through procurement. It is an enduring strategic risk, one that directly impacts operational resilience, cost discipline, and the credibility of long-term transition planning.

For many organisations, this risk is only partially understood.

Why this matters now

Three forces are converging for diesel-exposed operators:

1. Supply fragility: In its March 2026 Oil Market Report, the IEA reported that disruption across both crude and refined fuel markets has materially reduced flows through critical transport corridors, including the Strait of Hormuz. For diesel-exposed operators, this has translated to tighter supply and amplified price volatility, given diesel’s reliance on constrained refining capacity and limited near-term substitutes.
2. Intensifying scrutiny and assurance expectations: Fuel combustion typically represents a material proportion of Scope 1 emissions for mining, energy and heavy industry operators. Investors, regulators and Boards are increasingly focused on data quality, controls and assumptions underpinning fuel-related emissions disclosures, particularly under Australian Accounting Standards Board (AASB) S2 Climate-related Disclosures. Transition plans may also be reconsidered with fuel security as an additional overlay on the emissions reduction business case.
3. Competitiveness and margin pressure: Sustained fuel price volatility materially alters operating economics. In asset-heavy businesses with high fuel intensity, even small inefficiencies or loss points can have a disproportionate impact on overall performance, especially where costs cannot be readily passed through.

Together, these forces are reshaping fuel from a familiar operating cost into a more complex strategic risk, driven by supply security and volatility rather than price alone.

The uncomfortable truth about fuel management

Across resources, transport, infrastructure and heavy industry, a consistent pattern is emerging. In internal audits and operational reviews, fuel is often managed with a degree of informality that would be unacceptable for other high-value commodities. Many organisations remain highly exposed but only realise it once volatility or disruption forces the issue.

Common weaknesses we see include:

• Reconciliation and visibility gaps, with inconsistent end-to-end tracking from delivery through transfer, storage and on-site use, and heavy reliance on manual processes that obscure anomalies and delay detection
• Access and entitlement misalignment, particularly for employees or contractors, where approvals, contracts and system permissions are not consistently aligned, driving excess consumption and avoidable cost
• Governance and accountability gaps, including unclear ownership, inconsistent enforcement across geographies and sites, and limited exception monitoring, resulting in inconsistent practices and limited escalation
• Lack of a clear fuel investment framework, to guide capital allocation across efficiency, resilience and substitution initiatives, resulting in reactive spending rather than deliberate risk reduction.

In stable conditions, these weaknesses can sit quietly in the background. Under stress, they become material very quickly.

Why operational gaps become strategic risks

During a fuel shock, weak controls stop being a ‘process issue’ and start becoming an operational and financial risk.

Small discrepancies can compound into significant cost leakage, disputed supplier claims, or undetected loss. In fuel-intensive operations, the effect is rapid and magnified. More importantly, poor visibility limits the ability of management to respond confidently, just when certainty is most needed.

This is the point at which fuel management stops being an operational concern and becomes a board issue.

Fuel risk, governance and board accountability

Fuel is now shaping production continuity, cost base and contract performance in real time. Boards are being asked to make decisions quickly, often without a clear view of exposure, supply dependencies, or the second‑order consequences of short‑term operational responses.

Questions that may have been framed for the operations teams are now landing squarely at the board table. These questions include:

1. How exposed are we to fuel disruption?
2. How resilient is our operating model if supply tightens again?
3. Are assumptions underpinning our transition and capital plans valid?
4. Do we actually understand our fuel risk well enough to act decisively?

For many diesel-intensive operators, the honest answer to these questions is no, and that uncertainty is in itself a strategic risk.

Fuel risk as the foundation for better strategic decisions

For most organisations, the path forward does not start with fleet renewal strategies. It starts with understanding fuel as a production dependency and managing it with the same discipline applied to any other critical input.

This means achieving clear, granular visibility over fuel consumption, quantifying exposure to supply and price disruption, and clarifying governance, accountability and decision rights. Without this foundation, Boards and executive teams are being asked to make resilience, transition, and capital allocation decisions with incomplete information and compressed timeframes.

Done well, strengthening fuel management materially improves decision quality. It creates a credible basis for assessing efficiency initiatives, sequencing transition options, and preserving capital allocation as conditions evolve.

The strategic risk of doing nothing

Treating current fuel disruption as a temporary issue is a strategic mistake.

The IEA has cautioned that fuel volatility is likely to remain structurally elevated due to geopolitical risk, constrained inventories and long-dated transition timelines. Learnings from recent global disruptions, including COVID-19, and region-specific sanctions affecting energy, commodities and logistics markets, along with broader geopolitical uncertainty indicate that delayed decision-making can increase the likelihood of exposure to emergency procurement costs, rushed operational trade-offs and loss of negotiating leverage as conditions diminish.

Perhaps most critically, inaction narrows strategic options. When visibility and controls are weak, leaders are forced to make choices defensively rather than deliberately, often locking in pathways that are difficult and expensive to unwind later.

In this context, doing nothing is not a neutral position. It is acquiescence to higher risk, reduced certainty and diminished control at precisely the moment when Boards are expected to demonstrate oversight and foresight.

How BDO can help

The organisations that respond best will treat fuel as a strategic risk. By stabilising controls and visibility now and using that foundation to support confident decision-making under volatile conditions, organisations are better positioned to respond.

BDO works alongside natural resources & energy and heavy industry leaders to help clarify fuel-related exposure, strengthen governance and support confident decision-making when it matters most. Our approach is practical and risk-led. It starts with a fuel exposure diagnostic, helping management teams and Boards understand where the real risks sit today, then supporting actions that improve resilience without inadvertently constraining longer-term transition options.

While the immediate focus is operational stabilisation, the outcome is broader. Clearer insight, stronger governance and a more credible foundation for resilience and transition planning.

If your organisation is feeling the pressure as the fuel crisis continues, contact our experts to see how we can support you now and into the future.