Motorists are flocking to the petrol pumps amid fears the cost of filling up the tank could climb this week following attacks on a Saudi Arabia oil facility.
A weekend drone attack halved the kingdom's oil production and cut more than 5 per cent off the world's daily crude oil production.
The cost of crude oil has now risen by more than 10 per cent, or about US$6 a barrel and may well result in higher prices at our fuel pumps.
Fuel companies in New Zealand haven't ruled out increases and economist Cameron Bagrie warned prices could reach $3 a litre in a worst-case scenario.
However Z Energy chief executive Mike Bennetts said while petrol prices could rise by up to 10 cents a litre, a $3 a litre pump price was "very, very unlikely".
He said if the impact of the attacks was felt only short term then the outlook was promising.
"Oil in storage is quite high at the moment, so if this was to go on for a week or so it could be easily managed," he told Mike Hosking Breakfast on Newstalk ZB yesterday.
"If it's, say, a short-term disruption, it's probably worth up to $5 a barrel, or about 5 cents a litre at the pump.
"If it's a more long-term disruption, we could be looking at something around $10 a barrel, or 10 cents a litre."
Regardless of the amount, many motorists have already been rushing to fill up their tanks in anticipation of an increase.
Gull general manager Dave Bodger said the pumps were 30 to 50 per cent busier yesterday compared with an average Monday.
"It's definitely looking busier and I would expect once people work it all out, pumps will be busier through the balance of this week."
The majority of customers at Gull Kingsland that the Herald spoke to said they wanted to get in quickly before prices increased.
"I probably had half a tank but thought I'd better take advantage while you can still get cheaper prices anyway," caterer Lee Bell said.
"Essentially, it's one tank of gas and it goes within a couple of weeks but a lot of other people are driving long hours to get to work and using lots."
Rakino Island resident Laura Sunderland said driving was essential but she didn't need to get in the car every day because she was retired.
Her car was nearly empty when she decided to fuel up, but she was concerned any fuel increases would bolster the price of public transport.
"It's all those downstream things that are going to affect me more than the price of petrol."
A BP spokesperson said it was possible local fuel prices could be affected later this week but didn't want to speculate.
It was a similar story for Z Energy and Caltex, where a spokeswoman for both companies said there was "definitely" a possibility they would pass on any increased cost they incur.
"However, just what that the impact is and when it plays out remains to be seen."
AA spokesman Mark Stockdale said the attacks were not a great sign but New Zealand would have to wait to hear what impact they might have on fuel prices. "It's difficult to know what's going to happen."
The attack has been labelled the most serious on Saudi Arabia's oil infrastructure in decades.
Prime Minister Jacinda Ardern said there had already been an impact on oil prices.
"I believe we'll continue to see that flow through to the fuel market. It is obviously a market that jumps very quickly when we see international events such as this, but beyond that I haven't been specifically briefed."
The Wall Street Journal cited Saudi officials as saying a third of Saudi Arabia's output would be restored quickly, but a return to full production may take weeks. The country plans to use other facilities and existing stocks to supplant the plant's production in the interim.
President Donald Trump has also approved the release of US strategic petroleum reserves "if needed" to stabilise energy markets — an authorisation that could help prevent a spike in oil prices. The Trump Administration has blamed the attack on Iran.
A weekend drone attack on Saudi Arabia halved the kingdom's oil production, sending Brent crude oil prices up by more than 10 per cent, or about US$6 a barrel.
What does this mean for petrol prices here?
This is likely to cause higher prices at the pump as local petrol firms set prices on a range of factors, including the barrel price. However, the extent of the increase may be less than people think. About a third of the price at the pump is influenced by the barrel price.
How much could petrol increase by?
Much depends on what happens next, whether Mideast tensions rise and whether the market continues to price oil higher. Based on the latest spike, if sustained, then that could mean an extra 6-7c a litre, according to Z Energy boss Mike Bennetts.
- Staff reporter, agencies