Shop around for petrol, AA advises as oil producers cut output

Petrol prices in New Zealand have increased since late November. Photo / NZME

The AA is advising motorists to shop around for petrol as more oil-producing nations slash production, raising Brent Crude prices to their highest in 17 months.

Eleven non-Opec countries struck a deal at the weekend to reduce output by 558,000 barrels per day (bpd) next year - the first such pact in 15 years.

It resulted in the price of Brent Crude soaring to its highest since July 2015, before falling back to US$55.80.

This followed Opec's announcement late last month that its members would reduce output by 1.2 million bpd to 32.5m for at least the first six months of 2017.

Wellington analyst Ian Twomey said the deal represented a concerted effort by oil-producing nations to increase the cost of oil, after it fell below US$30 a barrel earlier this year.

The global oil market has been depressed by persistent oversupply.

"All those producers want a deal to be done to help support the prices ... albeit there's still a bit of smoke and mirrors with the numbers."

AA petrol prices spokesman Mark Stockdale said the deals were already being reflected in the cost of fuel here.

November's prices were falling until just before the Opec announcement when they jumped 3c to $1.92 a litre of 91 octane on November 22. On December 1 they increased a further 2c, another 3c on December 2 and a further 2c on December 8 to $1.99.

Despite this, New Zealand petrol stations operated in a highly competitive market and some were holding out from upping their prices in the hope of securing more customers, Stockdale said. "Price will vary between brands and between locations - that's what competition looks like. Not so long ago the number one complaint the AA got from our members was that there was no price competition between brands. Now the opposite is true - they complain that prices vary too much.

"So what we do say is motorists should definitely keep an eye on those price differences when they're driving around. When they see a low price, go in there and fill up."

The cuts in overseas oil production will not take effect until January and Stockdale said it remained to be seen if there would be even greater price rises here in the new year.

- Additional reporting Bloomberg