Energy Minister Chris Bowen has admitted the massive inferno at an oil refinery in Australia will affect supply as the cause behind the blaze is revealed as equipment failure.

Firefighters rushed to the Geelong Viva Energy refinery in Corio shortly after 11pm on Wednesday night, with up to 60 crew members still battling the 60metre-high flames eight hours later on Thursday morning.

A watch and act warning was issued for a dozen surrounding suburbs after a wind change sent smoke towards northern Geelong.

Hundreds of residents in impacted areas were urged to shelter indoors and keep their windows closed due to the large amount of smoke. The warning was downgraded shortly before 5.30am.

Bowen told Channel Seven‘s Sunrise the massive blaze will put further strain on Australia, as the country already grapples with a fuel crisis, with service stations around the country running dry and diesel prices soaring above $3-a-litre.

‘It will impact on production at this point, petrol rather than diesel and jet fuel,’ he said.

‘But we’re going to continue to work closely with Viva and really monitor and work together on any impacts.’

His comment comes as the real cause of the blaze was identified, pouring water on wild conspiracy theories that Iran could have been behind the incident.

Energy Minister Chris Bowen has admitted the massive inferno at an oil refinery in Australia will affect supply as the cause behind the blaze is revealed
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Energy Minister Chris Bowen has admitted the massive inferno at an oil refinery in Australia will affect supply as the cause behind the blaze is revealed

The Geelong Viva Energy refinery burst into flames on Wednesday night and continued to burn out of control seven hours later
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The Geelong Viva Energy refinery burst into flames on Wednesday night and continued to burn out of control seven hours later

Residents in surrounding suburbs were ordered to remain indoors and keep windows closed
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 Residents in surrounding suburbs were ordered to remain indoors and keep windows closed

FRV Deputy Commissioner Michelle Cowling revealed ‘an equipment failure in the refinery’ was to blame.

‘Viva is looking into that,’ she told ABC Radio Melbourne.

‘So there’ll be a thorough investigation into the failure of how this fire started.’

Bowen admitted the inferno was ‘not great timing’ given the conflict in the Middle East.

‘It’s important, as we’ve always said, that people buy as much fuel as they need, but no more, no less,’ he said.

‘We continue to make very good progress internationally on the imports to Australia, which is the majority of fuel that we consume.

‘This is a febrile international environment, fast–changing. Rays of sunshine and then setbacks in terms of the geopolitical environment in the Middle East.’

About 30 refinery staff who were at the Geelong site at the time have all been accounted for and there were no reports of injuries.

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The blaze was still burning out of control eight hours later on Thursday morning
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The blaze was still burning out of control eight hours later on Thursday morning

The Geelong Viva Energy refinery in Corio is one of Australia's last remaining refineries
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The Geelong Viva Energy refinery in Corio is one of Australia’s last remaining refineries

It’s understood that critical infrastructure in the refinery’s motor gasoline area has been damaged.

‘We still haven’t got the full report of how bad it is, but it’s significant,’ AMWU organiser Tony Hynds told Sunrise.

‘I was just astounded that no one was injured, knowing how dangerous that area is and what could have potentially could have happened.’

The facility supplies 50 per cent of Victoria’s fuel and 10 per cent of Australia’s, putting out 120,000 barrels of oil a day.

The cause of the fire remains unknown.

‘There will be an investigation but at this point, there are no suspicious circumstances,’ Bowen said.

‘It all appears to be accidental.’

The facility has been in operation for seven decades and employs more than 1,100 workers.

The refinery also produces hydrocarbon solvents, marine fuel oil, low aromatic fuel, avgas, bitumen and high-quality plastic feedstock used to create food packaging, medical equipment and polymer banknotes.

US President Donald Trump announced on Wednesday the Strait of Hormuz was ‘permanently open’.

He had ordered a blockade to push Tehran back on the negotiating table after the US previously failed to reach an agreement with Iran during peace talks in Islamabad.

It remains unclear whether Trump was declaring the strait open to shipping traffic immediately or signaling an intent to reach a permanent resolution as peace talks with Iran continue. The Daily Mail has contacted the White House for comment.

Trump said the Strait would be reopened after secret talks with Xi Jinping, claiming the Chinese president had agreed to stop arming Iran.

‘China is very happy that I am permanently opening the Strait of Hormuz,’ Trump wrote on Truth Social.

‘I am doing it for them, also – And the World. This situation will never happen again.’

Trump continued: ‘They have agreed not to send weapons to Iran. President Xi will give me a big fat hug when I get there in a few weeks.

‘We are working together smartly, and very well! Doesn’t that beat fighting??? BUT REMEMBER, we are very good at fighting, if we have to – far better than anyone else!!!’