An overpowering diesel smell was reported by patrons at the Mavericks on the Bay restaurant early Saturday evening and marina manager John Bradshaw said staff began spraying an oil dispersion product.

"We had no sales at that time, our system was not operating," he said.

Mr Bradshaw said he could only suggest the minor fuel spill had come from someone trying to fuel their boat manually with drums of diesel or from someone refuelling at the public jetty.

Port Stephens Council recently moved to ban refuelling at its public jetty, citing the risk of environmental degradation from oil spills as one of the reasons.

"This just reinforces the message that people need to find appropriate places to refuel their boats," he said.

Mr Bradshaw said it was difficult to determine exactly how much oil had ended up in the water.