Heightened geopolitical tensions could see petrol prices in New Zealand lift. (File photo) Photo: Marika Khabazi
New Zealanders may have avoided any conflict-induced petrol price spike, at least for now.
There had been warnings that any disruption to international oil supplies as a result of tensions in the Middle East could push prices up at the pump.
But with Iranian response to US attacks so far relatively limited, and the Strait of Hormuz remaining open, oil prices fell overnight after a small lift on Monday.
Infometrics chief executive Brad Olsen said in this environment it would be hard to justify putting petrol prices up. "You'd expect New Zealand petrol prices shouldn't increase any further. In fact, depending on how oil goes over the next couple of days you could start to ask if they might come down ever so slightly."
He said oil prices were roughly now where they were before Israel launched its strikes on Iran.
But he said it did not meant that the worry was over. "I don't think we're fully out of the woods yet... if you see direct action on oil facilities, oil tankers, the Strait of Hormuz directly, that changes the game back. We're not there but I don't think we should immediately say the risk is all over. It's just that it seems to be a lot more settled for now."
Mike Newton, from fuel price app Gaspy, said there had been an "upswing" in prices recently, even before latest escalation.
He said the price of 91 petrol had increased four cents in the past week alone.
"A lot of this will be purely speculative as the actual effect on supply is yet to make itself properly felt.
"There is talk that we may see similar impacts to those felt at the beginning of the Russia-Ukraine conflict, then we saw prices increase sharply by 35c in less than three weeks."
Miles Workman, a senior economist at ANZ, said the movement seen in oil markets so far was not huge compared to volatility experienced in the past.
He said the US was now a net exporter of oil and the higher global prices rose, the more incentive there was to increase US shale production.
"The world doesn't depend on these pockets anymore to get its oil because the US has become a much larger player. And the thing with shale production is it's actually quite easy to turn the taps on and off.
"What that means for world oil prices is that there's a bit of a cap in how high they may go but where that cap is is still a big unknown."
He said, as well as world oil prices, what New Zealand motorists paid would be affected by the New Zealand dollar.
"We don't refine any here any more because we closed Marsden Point. So where the New Zealand dollar goes is going to have a key impact."
He said, in situations where there were heightened geopolitical tensions, the New Zealand dollar was expected to come under pressure and could fall in value.
"So all else equal that increases the cost to import petrol.
"That's a potentially nasty combo because it's a double whammy where we're in a world where the oil price is under upward pressure because we're a bit worried about how much global supply we're going to see out of the region and then you get a weaker dollar which adds to the cost of imports."
He said historically the peak for 91 had been about $3.16 a litre in mid 2022.
More recently, prices had fallen and were probably down about 5 percent in the second quarter, he said.
If higher petrol prices started to flow through to broader inflation and inflation expectations, the Reserve Bank might decide it needed to react, Workman said, which could limit any further reductions in the OCR.
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