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Summarised by Centrist
Oil prices have dropped sharply on news of a two-week ceasefire, and hopes of a reopening of the Strait of Hormuz, but New Zealand drivers are once again being told not to expect much relief at the pump just yet.
Brent crude fell sharply after the ceasefire announcement, with Westpac chief economist Kelly Eckhold saying that if prices hold, petrol could fall by about 20 cents a litre, taking 91 to roughly $3.30. But Infometrics chief forecaster Gareth Kiernan said there was still a month-long “air bubble” in supply. He said quoted Brent prices were futures rather than the price of oil delivered today, and that Middle East benchmarks, Asian refining margins and shipping costs still mattered. AA spokesperson Terry Collins added that even if traffic resumes through the Strait, insurers and markets may need more than a short ceasefire before anything flows through to motorists.
MBIE says national fuel stocks remain stable, with about 63 days of petrol, 52 days of diesel and 54 days of jet fuel. In-country stocks also rose, and officials said there was “no indication of fuel supply disruption” and that fuel continued to flow normally into New Zealand. Luxon and Nicola Willis said importers had not reported issues with future orders or shipments, though Willis noted prices here usually respond within about a week and this case may take longer because of volatility and uncertainty.
Luxon said the best-case scenario for lower fuel prices was still “a matter of weeks”, noting traffic through the Strait remained badly disrupted. Willis added that cheaper crude can take longer to reach the pump because refined fuel markets and damaged regional facilities are also part of the picture.
Editor’s note: The “air bubble” is essentially the industry’s name for a supply-chain lag. Fuel already bought or already on the water at crisis prices is said to hit consumers before any cheaper post-ceasefire fuel does. That may explain some delay, though it does not fully answer why rises often feel faster and cleaner than falls.
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