An economist says petrol retail prices could increase by 20-30c a litre in the next couple of weeks. Photo / NZME
New Zealand’s fuel retailers have been warned not to take advantage of the conflict in the Middle East by hiking petrol prices this week.
It comes amid fears Kiwi motorists will soon pay the price at the pump over escalating attacks in the Middle East, with one economist saying it wasn’t far-fetched that petrol could surpass $3 a litre in New Zealand.
Gareth Kiernan, chief forecaster at Infometrics, told the Herald he expected to see retail prices at the pump rise in the next couple of weeks.
“I do expect to see those retail prices pushing up 20-30c probably over the next couple of weeks, if the pricing we’re seeing internationally is sustained,” Kiernan said.
“[Unleaded] 91 petrol prices have been sitting at just over $2.50 a litre, and so at US$80 [$136] a barrel you could be looking at prices pushing up to maybe just over $2.80 a litre.
“If it went to US$100 a barrel then you’re pushing up to maybe around $3.27 a litre.”
Overnight, Brent crude – the international oil benchmark – surpassed the US$80 a barrel mark after sitting around US$70 last week.
Kiernan said the response to oil prices so far hasn’t been enough to suggest petrol prices will reach $3 a litre yet.
“We’ve been a little bit surprised given the damage over the last day or so to facilities in Qatar and Saudi Arabia, that there hasn’t been more of a price response in terms of international oil prices so far.
“There’s probably upside risks there in terms of the supply issues with both production facilities and trying to get the oil through the Strait of Hormuz.
“As soon as you’re getting in that $2.80-$2.85 a litre range, it’s not that far-fetched that something could escalate and [retail prices] push up over $3.”
Speaking on Ryan Bridge TODAY earlier this week, AA’s principal policy adviser Terry Collins said Kiwi motorists shouldn’t expect the price of petrol to go up this week.
“What you’re seeing when you see the price of oil today is for futures. That’s next month’s oil price. So, the oil has to be then refined and shipped to New Zealand,” Collins said.
“There is no price pressure currently this week on our fuel… this is not an excuse [for retailers] to put the fuel up this week.
“However, long term for the rest of the month, if this continues, then I do expect an increase in fuel and diesel prices.”
According to the Gaspy fuel tracker app, petrol prices were starting to increase across the country in the past 24 hours.
The rise was starkest in the Wellington region where the cheapest available unleaded 91 petrol had risen 12c.
In Auckland, the cheapest available unleaded 91 had risen 4c.
The average price of diesel nationwide had risen to $1.85 this morning, up from $1.38 yesterday.
Motor Trade Association head of advocacy James McDowall said New Zealand’s fuel retailers are “price-takers” in the global market.
“[New Zealand fuel retailers] don’t set crude oil prices.
“Fuel retailers are very conscious of the pressure on household budgets and will do what they can to keep any cost increases to a minimum.”
McDowall said the situation in the Middle East is “changing rapidly” and “making predictions with accuracy is difficult”.
“If recent history tells us anything, it’s that these situations are unpredictable – the last significant disruption in this region was shorter than many anticipated, and prices corrected faster than most predicted.”
ASB senior economist Chris Tennent-Brown said an escalation in the Middle East has substantial geopolitical and economic consequences.
“Oil prices surged the most in four years as the first market impacts of the war in the Middle East began to be felt,” Tennent-Brown said.
He said a near halt to traffic through the Strait of Hormuz and disruption at a refinery in Saudi Arabia highlighted the threat to oil supplies.
“The conflict risks a prolonged energy supply shock, with oil prices surging, creating renewed inflationary pressures.”
Finance Minister Nicola Willis said Treasury and the Reserve Bank were continuing to monitor market developments.
“New Zealand is a trading nation, so significant global events do impact on the economy,” Willis said.
“A lot will depend on how long the conflict continues and whether it escalates.”
Willis acknowledged the price of crude oil had risen this week but was nothing like the levels seen when Russia invaded Ukraine in 2022.
“Recently introduced regulations require fuel importers to maintain at least 28 days of petrol and 21 days of diesel reserves,” Willis said.
“The petrol companies have all reported healthy stocks and additional supplies are already in transit, so domestic fuel shortages are not anticipated in the short or medium term.
“The impact on price will depend on how long the conflict continues and whether it escalates.”