The Murco fuel terminal at Milford Haven is investigating how contaminated fuel was delivered to two west Wales supermarkets.
At least 17 cars broke down after motorists bought unleaded petrol from Morrisons forecourts in Carmarthen and Llanelli, and sales of unleaded petrol have been halted at the two stations.
A spokesperson for Murco said a number of deliveries of unleaded fuel from its Pembrokeshire refinery may have been contaminated by water.
In a statement it said: “We are currently carrying out an investigation to determine whether such contamination has occurred at our site and its cause.
“Until we complete our investigation we will maintain additional controls to ensure that any fuel leaving the site is free of contamination.”
A Morrisons spokesman said: “Morrisons sources its unleaded petrol from the Milford Haven refinery, which has confirmed to us that a batch of fuel may have been contaminated with water.
“Deliveries to two Morrisons stores – Carmarthen and Llanelli – appear to have been from the affected batch.
"As soon as we became aware of the problem we immediately took the unleaded off sale at these sites.
“We apologise to those motorists affected and are doing everything we can to support them. Customers affected will be reimbursed for their fuel, vehicle recovery and any repairs which are needed.”
Motor Fuel Group, which bought Murco’s retail business in October and has a supply deal with the Milford Haven refinery, said none of its company owned or dealer sites had been affected.