The oil price shock that hit New Zealand earlier this year in the wake of the Iran war is far from over, and Kiwis may soon have to again fork out for higher petrol prices.
By Corin Dann of RNZ
That's the view of Westpac chief economist Kelly Eckhold, who has been a close watcher of the fuel crisis as it has developed this year.
On Thursday, the price of Brent crude oil hit a six-week high of US$96 (NZ$165) a barrel, as Iran and the US continued to exchange fire over control of the key oil route through the Strait of Hormuz.
Adding to the price pressure are new concerns that the back-up route through the Red Sea is also being affected by threats from Yemen's Iran-backed Houthi rebels.
Kelly Eckhold said the message for Kiwis is that the crisis is far from done.
"No, no, it's not over by any stretch of the imagination, and the prognosis doesn't look good. It looks like we are going to continue to be in this environment where we are going to get lots of geo-political shocks and risks, relatively high and variable fuel prices and, you know, you certainly can't rule out the prospect things go a lot higher yet."
Eckhold believes based on global oil prices this week, pump prices in New Zealand for 91 petrol would be back at levels last seen in May.
"A couple of days ago when prices were lower, it looked like $3.10 was on the cards, and now, with the extra lifts in prices we have seen in the last few days, you would probably have to add another 20 cents on to that."
The price of 91 petrol was on Thursday around $2.89 on average, according to the Gaspy fuel monitoring website. In April, it peaked at around $3.48 for a litre of 91.
However, Eckhold stressed a higher New Zealand pump price was contingent on global oil prices remaining at the current levels for a couple of weeks, to allow things to flow through.
"It's obviously been very much a movable feast in terms of exactly what's happening out there in the Gulf. The only thing is, in the last week or so, things have been getting worse, not better," Eckhold said.
Adding to concerns about the ongoing blockages of key oil supply lines through the Strait of Hormuz and Red Sea is that global inventories for refined petrol that New Zealand needs have being drawn down to lower levels.
Even so, Kelly Eckhold does not believe New Zealand has a fuel supply issue for now.
"I don't think I see the supply worries, certainly for now, although obviously it would be very interesting to see what happens if this deteriorates and we find ourselves still in this position in a couple of months," he said.
After the ceasefire in the war last month, global prices had fallen steadily to around US$72 (NZ$124) a barrel.
That was well down on the peak of the US-Iran conflict earlier this year in April, when prices topped US$126 (NZ$217) a barrel.
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