A surge in global oil prices means Kiwi motorists are staring down "week after week" fuel hikes, with regular 91 expected to break the $3 barrier in the coming days as New Zealand gets caught in the middle of a global oil shock triggered by the escalating conflict involving Iran.
AA principal policy adviser Terry Collins told 1News crude oil prices had soared from under US$60 a barrel nine weeks ago to nearly US$93, driven by instability around the Strait of Hormuz, a chokepoint through which 20% of the world’s oil flows.
"If tankers can’t get through, 20% of the world’s crude isn’t getting to refineries. It’s basic supply and demand — supply gets constricted and prices shoot up," he said.
Qatar's energy minister warned that he expected all oil and gas exporters in the Gulf to stop production within days.
"Everybody's energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that can't supply," Saad al-Kaabi said, adding that oil could go as high as US$150 a barrel.
Every US$1 increase in crude typically translated to about one cent at the pump, Collins said.
"From the start of the year to now, we should already be expecting about 33 cents of increases — and that hasn’t fully hit yet," he said, adding the increases had only just begun flowing through.
"Next week's fuel is going to be more expensive than last week's — and the week after that will be more expensive again. We’re on an upward trend for the rest of the month.”
Fuel retailers monitoring Middle East 'closely'
Fuel retailers said they were watching the situation in the Middle East closely but stressed local prices were tied to global refined fuel costs, shipping and the exchange rate.
Z Energy said the conflict had already pushed up global refined fuel costs, shipping and insurance, but there are currently no issues with supply in New Zealand.
"We remain focused on offering customers a fair price and staying competitive in every market we operate in," a spokesperson said.
BP said it reviewed prices daily to ensure competitiveness in the market, with a number of factors influencing prices.
"There are also a number of independent BP operators all around the country who set their own prices and manage their own operations."
Gull said it was focused on "keeping prices as sharp as possible" and pointed to its $2.55 price for 91 at its Papatoetoe site, encouraging motorists to check the Gaspy app for real time comparisons.
New Zealand was especially exposed, Collins said, with higher fuel costs hitting transport, manufacturing, freight and jet fuel and compounding inflation risk during the harvest season.
"All I can tell you is that fuel price is going to go up, and there's very little we can do about it."
While Collins warned against panic buying, he did offer practical advice.
"If you're going to get $50 worth it, I'd think about filling the tank up."
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