The fire broke out at the Corio site, southwest of Melbourne, about 11pm on Wednesday and took fire crews almost 12 hours to extinguish.
The Viva Energy Geelong refinery supplies more than half of Victoria's fuel and about 10 per cent nationwide, according to the company.
Energy Minister Chris Bowen said the company was confident it could replace any production shortfall caused by the blaze with imported fuel, but admitted the full extent of the impact on petrol production was not yet clear.
"This is not a positive development, this is not good timing, and this is a setback," Mr Bowen told reporters on Thursday.
"But I can assure Australians, the government and industry are working very closely together to manage the impacts of this fire.
"Viva is confident that they will be able to replace the impacted petrol production with imports."
The fire primarily affected infrastructure responsible for the production of petrol and aviation gasoline, which is distinct from jet fuel and usually used by small aircraft.
Production of diesel and jet fuel was continuing at the site at temporarily reduced levels as a safety precaution, Mr Bowen said.
While investigators would probe the cause of the fire, incident controller Anthony Pearce from Fire Rescue Victoria said a gas leak was believed to have been responsible.
"There was a leak of gas from a mechanical component in the system," he said.
"The gasses then appeared to have ignited."
An estimated 25 to 50 employees were inside the facility when the fire broke out and immediately acted to suppress the blaze, Australian Workers Union Victorian branch president Ross Kenna said.
"There was an ignition of gas and it created an explosion and fireball," he told AAP.
"Our members on site managed to get the fire suppression systems running straight away."
Speaking from Malaysia, where he was in the midst of securing an energy trade deal, Anthony Albanese described images of the fire as "very distressing".
"Clearly there will be consequences for it, but there'll be a proper assessment taking place over the coming short period," the prime minister said.
"As for the damage, obviously there will need to be an assessment of that and the consequences for fuel supply.Â
"We'll continue to work with the company to do what we can to make sure that anything that is offline is brought online as soon as possible."
Malaysia is the largest supplier of crude oil to Australia.
Despite assurances from the government, Institute for Energy Economics and Financial Analysis energy finance analyst Kevin Morrison said the fire could act like a "second oil shock", pushing prices higher at the bowser, particularly in Victoria.
"We saw sort of an immediate impact on prices when the conflict started in Iran. You could almost sort of see a similar measure here," he told AAP.
"Obviously not as dramatic, but we're facing another major supply interruption and when we have that, prices normally react upwards."
The refinery can produce more than 120,000 barrels of oil per day, manufacturing petrol, diesel, jet fuel, LPG, avgas and low aromatic fuel.
Along with Ampol's Lytton Oil Refinery in Brisbane, the Geelong plant is one of two facilities capable of refining fuel domestically.
About 50 firefighters, 10 fire trucks and a boat attended the scene, Fire Rescue Victoria assistant chief fire officer Michael McGuinness told reporters.
There are no reported injuries and all employees and emergency responders have been accounted for.
Viva Energy halted trading its shares on the stock market ahead of an update on the damage caused by the blaze.
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