Petrol Prices Hit $3 as Middle East Conflict Fuels Increase – NZ Update

Novel Zealand motorists are facing sharply higher prices at the pump, with 95 octane petrol now exceeding $3 a litre in several locations across the country. The increase is directly linked to escalating conflict in the Middle East and the resulting uncertainty in global oil markets, echoing price surges seen following Russia’s invasion of Ukraine.

On Friday morning, Gaspy, a fuel price monitoring app, recorded $3.019 for 95 at Z Kapiti Road and $3.059 at g.a.s Waikanae. Further south, NPD Fox Glacier was charging $3.089 for 95, while stations in Greymouth were also around the $3 mark. The rising costs are already impacting household budgets, with residents expressing concern about affordability.

Impact on Consumers and Regional Variations

The price increases aren’t uniform across the country. Kapiti Coast resident Bill Turner told RNZ that the price of 91 petrol had jumped 12 cents a litre at his local station in the past week, making it difficult to manage household expenses. “I’m lucky I’ve got a business. I should be retired but I’m still working to pay for this,” he said. An Otaki grandmother shared with RNZ that she was proactively filling up her tank in anticipation of further price hikes, a strategy becoming increasingly common among concerned drivers.

Gaspy spokesperson Mike Newton noted that while Kapiti and the West Coast are currently leading the charge in price increases, more isolated areas are also nearing the $3 threshold. He highlighted the parallels with the price volatility experienced after the Russian invasion of Ukraine, but suggested the current situation carries even greater uncertainty due to existing constraints on Iranian oil exports. The ongoing conflict in the Middle East is the primary driver of this instability.

Broader Price Trends and Regional Disparities

Nationally, the average price for 91 petrol currently sits at $2.66 a litre, according to Gaspy. However, this average is quickly becoming outdated as prices continue to climb. Recent data from the New Zealand Herald indicates that petrol prices have risen by as much as 14 cents a litre this week, with Auckland experiencing an 11-cent increase in the price of unleaded 91 in just four days. As of lunchtime on Friday, the cheapest unleaded 91 in Auckland was $2.31, while Christchurch saw a 14-cent increase to $2.78, and Wellington experienced an 8-cent rise to $2.85.

The situation is particularly acute in some areas. BP Wanaka is already charging $2.90 for petrol, and the price of 95 octane has surpassed $3 in Wellington, the Kapiti Coast, and Wānaka. The international benchmark Brent crude oil has also seen a significant increase, surpassing US$85 a barrel after sitting around US$70 last week. West Texas Intermediate is trading above US$80 a barrel for the first time since January 2025.

Supply Chain Dynamics and Market Response

The upward pressure on oil prices is largely attributed to concerns about disruptions to traffic in the Strait of Hormuz, a critical waterway for global crude oil transportation, through which approximately 20% of the world’s crude oil is transported. Infometrics chief forecaster Gareth Kiernan anticipates that retail prices could increase by 20-30 cents over the next couple of weeks if current international pricing persists. He suggests that if Brent crude reaches US$100 a barrel, 91 petrol prices could climb to around $3.27 a litre. These projections highlight the sensitivity of New Zealand’s fuel prices to global geopolitical events.

The increased demand is also evident in long queues forming at petrol stations across the country. Waitomo Group CEO Simon Parham reported a 10-15% increase in sales this week, with customers rushing to fill up their tanks ahead of anticipated price increases. Newstalk ZB reported that some customers are even bringing fuel containers to take advantage of current prices.

Government Response and Historical Context

The current situation echoes the price spikes experienced following the Russian invasion of Ukraine, when the government responded by temporarily halving the fuel excise tax. Whether a similar measure will be considered in response to the current crisis remains to be seen. However, the AA’s policy advisor, Terry Collins, noted that oil futures for April have already reached US$85 a barrel, 12 cents higher than last week, suggesting that prices are likely to continue their upward trajectory in the near term. He doesn’t foresee prices decreasing in March.

What to Expect in the Coming Weeks

Looking ahead, the fuel market is expected to remain volatile. The duration and intensity of the conflict in the Middle East will be key determinants of future price movements. Infometrics’ Brad Olsen points out that existing fuel stocks are currently moderating price increases, but this buffer is unlikely to last. He also warns that rising diesel prices will impact the commercial sector and potentially exacerbate inflationary pressures. The challenge, Olsen explains, is that fuel price increases are often passed on to consumers, contributing to a broader rise in the cost of living.

Consumers are advised to utilize fuel-finding apps like Gaspy to identify the most competitive prices and to consider adjusting their driving habits to conserve fuel.