Z Energy tips petrol could rise 5c to 10c in response to Saudi attacks

Sunday, 15 September 2019

Taxes account for more than half the price we pay at the pump. (Video first published in May 2019)

Z Energy says petrol prices could rise by 5 to 10 cents a litre this week assuming oil prices rise by US$5 to US$10 a barrel in response to the attacks on Saudi Arabia.

Both BP and the Automobile Association also warned earlier on Sunday that petrol prices could rise within days in New Zealand as a result of Saturday's attacks initially attributed to Yemini rebels on Saudi Arabian oil facilities.

Z Energy spokeswoman Victoria Crockford said there was plenty of oil in storage in Saudi Arabia, so there was no 'immediate supply issue'.

'That said, this sort of disruption can have a significant effect on oil prices and we will not know the impact until trading markets open on Monday,' she said.

The impact of the drone attacks on the world's largest oil processing facility in Saudi Arabia and a major oil field operated by Saudi Aramco early on Saturday, local time, may be felt by motorists around the world.

* What we are paying for when we buy petrol**

'Given what has happened previously with these sort of disruptions, this could cause a US$5-$10 per barrel increase in prices in the short term.'

That level of crude oil price increase would impact pump prices in New Zealand by about 5 to 10 cents per litre, she said.

Crockford said Z had not seen any panic buying in New Zealand on Sunday.

'We typically reflect price changes into our pump prices within a day or two of any change up or down in global oil prices.'

Changes in the oil price flow 'promptly' through to the pump, says the AA.

Houthi rebels launched drone attacks on the world's largest oil processing facility in Abqaiq, Saudi Arabia and the major Khurais oil field on Saturday, sparking huge fires.

The Wall Street Journal reported the attacks had shut down half of the country's oil production, which analyst OilPrice.com said would be equivalent to reducing global supply by about 5 per cent.

Smoke from the drone attacks on Saudi's oil facilities can be seen from space.

OilPrice.com suggested oil prices could spike above US$100 (NZ$156) a barrel in the wake of the attacks when oil markets reopened, up from their current range of US$55 to US$61 a barrel.

While Saudi Arabian oil company Aramco was confident that it could recover quickly, if it couldn't, the world could face a production shortage that could send oil prices 'into the triple digits', it said.

BP spokesman Gordon Gillan said its prices were reflective of the oil price in international markets among other influencing factors 'so it is possible there could be an impact on local prices later this week'.

BP did not want to speculate further, he said. 'We review our BP Connect prices every day so our prices are as competitive as possible.'

The cost of fuel only accounts for about a third of the price of petrol, with much of the remainder represented by taxes.

That means prices at the pump would not rise as much as the price of oil, but the impact 'could be concerning,' AA spokesman Mark Stockdale said.

'It could have a negative impact which would inevitably flow through to the pump.

'We have to wait and see, but it is certainly not helpful. It is these sort of geopolitical events that can lead to fuel price spikes and they are outside the control of fuel companies, the Government and Kiwi motorists,' he said.

Mobil was also approached for comment.

A barrel of oil equals about 159 litres, which means each sustained US$10-rise in the price of a barrel of oil could be expected to push up the price of petrol, diesel, jet fuel and other derivatives by an average of about 10 NZ cents a litre.

Changes in the price of oil flowed promptly through to the pump prices of petrol and diesel, Stockdale said.

'The way the fuel price works in New Zealand is that it is benchmarked to the commodity price.

'We have seen in the past that the price at the pump reflects changes in the commodity price within the following day or two.'

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