A major fire has broken out at one of Australia's two oil refineries, deepening fears over the nation's petrol supplies amid a global fuel crunch.

Emergency crews rushed to Viva's Corio oil refinery in Geelong, southwest of Melbourne, just before midnight on Wednesday, after reports of explosions and flames. The refinery produces 50% of Victoria's fuel and 10% of the nation's.

No one has been injured, but the blaze continues to burn and has prompted warnings about air quality in the area.

The refinery is still partially operational - jet fuel and diesel will continue to be made at reduced levels as a safety precaution - but the government has warned of impacts to petrol production.

Energy Minister Chris Bowen said the fire was "not great timing" with Australia's fuel supplies under pressure since war broke out in Iran creating a global oil crisis.