New Zealand motorists may have to brace for higher fuel prices, with analysts warning that recent declines at the pump are unlikely to continue amid renewed geopolitical tensions in the Middle East.
According to a report by Stuff, after dipping below the $3-per-litre mark for the first time in months in late June, average petrol prices have begun facing renewed pressure. According to fuel price monitoring app Gaspy, the national average on Monday stood at $2.92 per litre for 91 octane, $3.11 for 95, $3.28 for 98, while diesel averaged $2.38 per litre.
Fresh military strikes involving the United States and Iran, along with the closure of the Strait of Hormuz, have raised concerns about global oil supplies, reducing hopes of further price relief.
Westpac NZ chief economist Kelly Eckhold said petrol prices are likely to remain within a relatively stable range for now.
“We're past the period now where we should expect large, significant falls unless something changes. If I look at where those [gas] futures are now, given where the exchange rate is, somewhere in the $2.80 to $3 range broadly looks about right,” he said, Stuff has quoted.
Eckhold said motorists expecting a sharp drop in prices may be disappointed, as significant declines are unlikely without sustained improvements in global fuel supply.
“The reality is that's going to require a sustained period of above-average oil flows that reach the refineries and allow people to rebuild inventories again, as quoted by Stuff.
“So I think that'll be a much longer-term proposition, not something that'll happen in two or three weeks, but something that could happen over perhaps two or three months,” he said, Stuff has quoted.
AA principal policy adviser Terry Collins said current pump prices may represent the lowest point for the foreseeable future.
“Probably as good as it's going to get,” he said, adding that prices are “definitely under pressure now,” Stuff has quoted.
“Are they going to go up? Yeah, they're going to go up a bit. Are they going to go up anything pre-conflict? No, they're not going to go up in the realms of that. How long is it going to take? We'll just see how things play out,” as quoted by Stuff.
Collins said ongoing uncertainty in global energy markets makes it difficult to predict how quickly prices will rise.
“We all know there's peaks and troughs. I think we got to the trough last week, and we're going to get a little bit of a steady rise. I've been seeing the price of oil and the price of refined products, all of that's going up again, as quoted by Stuff.
“There won't be any more easing, that's for sure. You probably won't see the big specials like we saw, and you might see a bit of upward movement over the next week or two,” Collins said.
Both analysts pointed to international conflicts as key drivers of fuel price volatility. Eckhold said the closure of the Strait of Hormuz and instability in the Middle East could continue to influence oil prices unless tensions ease.
Collins also highlighted the impact of the war in Ukraine, noting that attacks on Russian oil infrastructure and Russia's ban on diesel exports have tightened global diesel supplies.
“They were the second-largest global exporter of diesel. So the people that they sold their diesel to will now be looking to other markets, our Asian markets where we buy, to replace that diesel. So that's got to have an upward push on the prices,” he said, Stuff has quoted.
Meanwhile, the New Zealand Government has moved to strengthen the country's fuel security by adding approximately 93 million litres of diesel storage capacity at Marsden Point. The diesel, owned by Z but controlled by the Government in an emergency, began arriving in late June, with a second shipment expected this month.
According to the Ministry of Business, Innovation and Employment, as of July 5 New Zealand had 33.4 days' supply of petrol, 28.6 days of diesel and 25.2 days of jet fuel in reserve, as reported by Stuff.
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