New Zealand petrol prices have reached an average of $3 per litre, driven by rising global oil costs following recent international conflicts.
Fuel Price Surge Linked to International Tensions
Fuel prices in New Zealand have skyrocketed since late February, coinciding with conflicts involving the US and Israel. On Monday, 91 octane petrol averaged $3.42 a litre, while diesel edged ahead at $3.43, according to the Gaspy fuel price tracking app.
The price of Brent crude oil has reached as high as US$115 a barrel this week, a significant increase from around US$66 before the conflict began.
Petrol prices have risen by 36% in the past 28 days, while diesel has surged by 85%, according to Gaspy data.
Government Support Package
The government has announced a support package to mitigate the impact of rising fuel costs. Starting April 7, approximately 143,000 working families with children will receive an extra $50 per week through an increased in-work tax credit. This boost will last for one year, or until 91 octane fuel prices fall below $3 for four consecutive weeks, whichever comes first.
Expert Analysis: Price Outlook
University of Auckland Emeritus Professor in Economics Basil Sharp anticipates it will take “months” for the current backlog of oil waiting to travel through the Strait of Hormuz to work its way through the system. Nearly 2000 vessels were reportedly stranded near the Strait last week, awaiting the resumption of their journeys.
Sharp drew parallels to the oil crises of the 1970s, suggesting prices tend to increase sharply, decline slightly, and then stabilize at an elevated level before potentially rising again.
Mesbahuddin Chowdhury, an associate professor at the University of Canterbury, noted that fuel prices historically rise more sharply than they fall, based on experiences during the Covid-19 pandemic and the Russia-Ukraine war. He suggested a minimum of two to three weeks would be needed to see prices begin to fall if hostilities ceased immediately, but cautioned that the duration of the conflict would be a key factor.
Future Considerations
Both experts agreed that a prolonged conflict would exacerbate fuel price increases. Sharp and Chowdhury suggested the situation highlights the need for the government to explore alternative energy measures and remove barriers to renewable energy development.
According to South Korean media, Iran’s ambassador to Seoul indicated that South Korean ships could conditionally pass through the Strait of Hormuz, subject to coordination with Tehran. South Korea and Singapore are now New Zealand’s primary sources for refined fuel following the closure of the Marsden Point oil refinery.
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