The spectre of higher fuel prices - is $4 a litre possible?
Monday, 9 March 2026
Motorists should brace for a shock at the pump as the price of petrol is expected to drive north towards $4 a litre of 91 octane fuel as the war in Iran escalates and oil production slows.
Infometrics chief executive Brad Olsen said oil prices would go above the current US$107 a barrel, sending petrol prices above $3.25 a litre of 91 octane and could go even higher than that.
This was the worst spike the world had seen since the Russian invasion of Ukraine, he said.
Olsen said the challenge with that comparison, is that the Labour government at that point brought in an expensive and “economically silly” policy to temporarily reduce fuel excise duty and lowered Road User Charges for diesel vehicles to ease the cost of living crisis.
Read more:
Iran war: Labour sees case for cutting fuel taxes, but ACT doesn’t
Brace for NZ petrol prices to hit $3 milestone, and diesel at $2.50 amid Iran conflict
Chris Bishop's big rewrite shows how far the state has drifted from competence
That did at least negate some of the direct shock that households and the economy felt. “We're certainly bracing for that bigger impact, not only to people's fuel bills, but of course, to inflation more generally,” Olsen said.
On the positive side, in terms of the economy, petrol had become a smaller proportion of the Consumer Price Index over time, he said.
“It's still important for a lot of households, but people are effectively spending less of their proportional overall income on petrol, either because there are more electric vehicles or hybrids in the fleet, but also because newer vehicles have become a whole lot more fuel efficient.”
But the cost of transporting goods, and therefore prices on the shop shelves, was going up with fuel suppliers lifting diesel prices by 44 cents a litre.
Terry Collins, principal policy adviser at AA, said he was shocked oil prices had increased 17% overnight, or 25% since Friday.
“I've never seen a jump like it.”
The price of oil was going to climb to about US$109 a barrel and could push on to US$110, their highest prices since March 2022, at the heights of sanctions against Russia after it invaded Ukraine, Collins said.
For every dollar increase in the barrel price added a cent at the petrol pump. Just in the last last week petrol prices had increased 28c, he said.
If the price of oil rose to US$150 a barrel that would add another 50c at the pump, and start to close in on $4 a litre for 91 octane fuel, he said.
It was also harvesting season for the viticulture and horticulture sectors, which would face higher transport costs to overseas markets, Collins said.
“It's a bloody kick in the backside for us.”
But the situation in Gulf was much more severe than the Russian Ukrainian war where restrictions were put in place to restrict Russian oil sales to fund its war.
In the Gulf, supply was physically being restricted by the closure of the critical Strait of Hormuz. If the tanker ships could not pass through the narrow strait to production sites around the Gulf, where storage facilities were already full, fuel prices would rise, he said.
The S&P/NZX 50 Index was trading sharply lower today, falling 3.25% to 13080.26 points in late afternoon trading.
The index opened flat at 13,519.35 but immediately faced heavy selling pressure and dipped significantly in early afternoon trade. Sentiment was dented by the escalating Middle East conflict, which pushed global crude oil prices well past US$100 a barrel and heightened inflation fears.