Middle East war blamed for 30% price spike on gas bottles

Monday, 27 April 2026

The conflict in the Middle East and the choking of the Strait of Hormuz might trigger another gas shock, which would be felt long-term by suppliers and customers. (File photo)

While gas companies say there are no LPG supply issues and the supply chain has not been disrupted by the Middle East war, some will apply a surcharge starting next month.

They are calling them “price adjustments” and “temporary measures”, but businesses and households that use LPG will face up to a 30% price increase.

Since early 2022, when Russia launched a full-scale invasion of Ukraine, the price of gas has risen by 65% in New Zealand, with a 13% increase since March last year alone. The conflict in the Middle East and the closure of the Strait of Hormuz might trigger another gas shock.

However, Gas NZ chief executive Jeffrey Clarke said LPG importers had not reported any difficulties and that future deliveries looked normal.

More than half of the country’s LPG, or liquefied petroleum gas, is sourced from onshore and offshore gas fields in Taranaki, whose production has declined over the years, while the rest comes from overseas, mostly Australia.

In New Zealand, there were over 300,000 businesses and households that used 45kg bottled cylinders or received gas through pipes, of those 187,000 were in the North Island, and 113,000 were in the South Island, he said.

Last year, 193,470 tonnes of LPG were sold across the country, with more than half of that being sold in 45kg bottles to businesses and households, according to figures from the gas lobby group.

“Nothing GasNZ is seeing at the moment suggests there is likely to be any shortage of LPG supply,” Clarke said.

However, the flow-on costs of the Middle East conflict were being felt by businesses, as the global price of LPG has risen significantly because of volatility in global markets.

“This will be increasing the price that LPG retailers have to pay to buy the LPG gas they supply to customers,” he said

As there was no natural gas supply and no gas pipe network in the South Island, ships from Australia and the North Island ensured a constant LPG supply to South Islanders.

KiwiGas, a Canterbury regional distributor, has felt the pinch of the unpredictable energy market.

Owner Geoffrey Hampton said the increase in diesel prices had a direct impact on the company, as LPG bottles were transported on tankers and trucks from import terminals and production facilities to depots.

Between February and March, petrol prices were up by 18.6% and diesel prices by 42.6%, according to Stats NZ – the largest increase for both fuel types since 2011.

“We’ve held our base pricing steady and absorbed rising costs for as long as possible.

“However, we have recently experienced a significant and totally unexpected increase in costs from our LPG supplier, alongside continued increases in diesel pricing.

“This combination has made it unsustainable for us to continue absorbing these costs,” Hampton said.

According to an email sent to customers, KiwiGas would add an extra diesel surcharge of $2.14 per 45kg bottle, and an extra LPG import surcharge of $0.69 per kg.

Rockgas general manager Helen Murchison said customers faced a 3.1% plus GST increase on the cost of an LPG bottle in April.

For a Christchurch customer paying around $150 per 45kg bottle, these “temporary measures” will translate to a 22% increase.

The “two variable surcharges will be introduced“ on May 1 and “will move in line with actual cost changes, meaning they may increase or decrease over time”, the email said.

The disruption caused by the bombings on Middle East infrastructures could cause serious gas supply shocks, which would affect suppliers as well as users long-term, according to Goldman Sachs reports.

Due to the Middle East war and its impact on costs, Rockgas, the largest LPG retailer in New Zealand, will also add a “global disruption adjustment” starting May 23.

General manager Helen Murchison said higher transport costs were a factor contributing to the pressure on the company.

“LPG is primarily delivered by truck, either in bottles to homes and smaller businesses, or by tanker to commercial operations.

“As these deliveries rely on diesel, higher diesel prices are also contributing to increased operating costs.”

She said Rockgas customers were notified on Wednesday about the variable price, which would start with a 3.1% plus GST increase on the cost of an LPG bottle.

For an Invercargill customer paying $150 for a 45kg bottle, that would translate to a 3.6% increase, or an extra $5.

As colder temperatures begin to bite around the country, gas demand might go up, which could put extra pressure on supply.

However, gas companies have rebuilt their inventories ahead of the colder months, while at the same time the northern hemisphere is moving into the warmer months, which can ease demand on global supply.

Genesis general manager LPG operations Neil Crookes said the company had ensured supply resilience with higher stock and increased imports, mostly from Australia.

He said the company sourced most of its LPG from the Kupe gas field in Taranaki and they had not seen any impacts on supply availability.

“A high percentage of our LPG delivery fleet utilises diesel fuel, and therefore rising diesel pricing has put pressure on delivery costs.”

Crookes said they had not passed on these costs to their customers, but they “were considering options”.

Energy market analyst John Kidd said the wholesale price of LPG has gone up by almost 50% since last month.

Energy market analyst John Kidd said LPG wholesale prices have gone up by almost 50% since last month.

While in March a tonne of LPG could be bought for US$540 ($915), in April that price was US$780 ($1321), he said.

Kidd said the double blockade of the Strait of Hormuz was impacting crude oil exports to Asian refineries, which ultimately provided LPG to New Zealand, via Australia.

Elgas, a company owned by Ireland-based multinational Linde, will add a surcharge to the price of LPG bottles for Kiwi customers too.

“Our supply of LPG is not solely dependent on sources or trade routes in the Middle East and we do not forecast supply concerns,” an Elgas spokesperson said.

“We have, however, experienced a significant increase in costs across our supply chain due to the conflict which has meant we have needed to revise pricing.”

Emails sent to Elgas customers showed the price of a 45kg gas bottle in Christchurch has gone up from $154.99 in November to $204.94 in April, a 32% increase.