Petrol price shock could be worse than assumed; jet fuel in Asia up 72%

Friday, 6 March 2026

Petrol prices could rise much higher than the current US$12-a-barrel increase in the price of oil would imply, information from industry sources suggest, as war spreads in the Middle East.

AA policy adviser Terry Collins has said a good rule of thumb is that every US$1 increase in the price of a barrel of oil adds about one New Zealand cent to the price of petrol at the pump.

But it is understood larger increases have already flowed through to the price of refined fuels, and that shipping and insurance costs involved in bringing petrol and diesel to New Zealand have also risen sharply in the wake of conflict in Iran.

Reuters reported overnight that jet fuel prices in the Asian ​hub of Singapore rocketed 72% to US$225.44 a barrel on Wednesday — demonstrating the potential for an outsized reaction to the developments in Iran on the price of refined fuels.

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US airline trading association Airlines for America reported the spot-market price of jet fuel reached US$3.95 a gallon on Thursday, US time, up from about US$2.40 before the US and Israeli strikes on Iran began on February 28.

The AA is expecting petrol companies will start raising their petrol prices for next week, as the price of oil continues to rise on the back of the Iran conflict.

Collins said the petrol chains had so far held their prices because the fuel they are currently selling was bought before the US and Israeli strikes on the Iranian regime, but he did not expect that to continue for long.

It is understood some petrol chains price petrol based on the expected cost of their next import shipment.

The price of Brent crude oil for May delivery was hovering around US$85 a barrel on futures markets at lunchtime on Friday, up about US$12 on its pre-conflict price.

Westpac chief economist Kelly Eckhold has predicted that oil could reach US$100 based on disruptions to Iranian supply, and to US$185 a barrel in the worst case scenario of a three-month closure of the Strait of Hormuz.

The price of international airfares to and from New Zealand and Europe is rocketing because of a lack of capacity following airport closures in the Middle East.

Finance Minister Nicola Willis said on Thursday that it was still too soon to say what impact the turmoil in the Middle East would have on the New Zealand economy in part because its duration was not yet clear.

“We’ve continued to see some volatility in the price of oil. We’re continuing to see the disruption of freight, and we’re continuing to see that equity markets are a little down overall.”

But the effects were still relatively muted compared with some past global events, she said.