Conventional studies of petroleum basins associate oil generation with the gradual burial of organic-rich sediments. These classical models rely on the interplay between pressure, temperature, and the time required for organic matter transformation to oil and gas. These processes usually occur over geological timescales, but may be accelerated by rapid reactions when carbon-rich sediments are exposed to migrating magmatic fluids. The spectacular Lusi eruption (north-east Java, Indonesia) is the surface expression of the present-day deep interaction between volcanic and sedimentary domains. Here we report the ongoing generation of large amounts of hydrocarbons induced by a recent magmatic intrusion from the neighbouring Arjuno-Welirang volcanic complex. We have investigated a unique suite of oil and clast samples, and developed a detailed conceptual model for the complex hydrocarbon migration history in this part of the basin by integrating multidisciplinary techniques. Our results show that palynology, organic petrology, and chlorite microthermometry are the most sensitive geothermometers for basins affected by recent magmatic activity. These findings further our understanding of the driving mechanisms fueling the world's largest active mud eruption and provide a unique dataset to investigate modern hydrocarbon generation processes.