Iran war: Government warns fuel prices could stay high despite ceasefire
Wednesday, 8 April 2026
A ceasefire in the war in the Middle East is “incredibly encouraging” but there will be no escaping the inflation and price rises coming as a result, Prime Minister Christopher Luxon says.
The United States has announced a two-week ceasefire in its conflict with Iran, with the Middle Eastern country’s foreign minister Seyed Abbas Araghchi saying on X that safe passage through the Strait of Hormuz will be possible through co-ordination with Iran.
Luxon said it was “positive to see a suggestion of a ceasefire” but he noted it was a fragile situation, and the Government needed to wait and see how developments unfolded.
Finance Minister Nicola Willis said while markets had reacted positively to the news, it was still unclear how fast cargo would move through the Strait of Hormuz.
“Oil and gas facilities have also been damaged or shut down across the region, and these will take time to bring back online.”
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She said generally oil markets respond quickly to changes but, given increased volatility, high fuel prices could stick around longer.
“We may see some significant lag effects, even if the ceasefire endures, but there's no doubt for Kiwis [who] have been feeling pain at the pump, this is positive news.
“This is the direction we want to be travelling in for more affordable fuels.”
In response to a potential tax on the Strait of Hormuz, Luxon said the Government believed in freedom of navigation.
“If you think about what could then subsequently happen with taxes on all sorts of bodies of water that New Zealand uses, very critically to move its exports around the world, that's not something we want to see happen.”
He said the Government just wanted the parties in the conflict to get a ceasefire in place that held.
Foreign Minister Winston Peters, who met with United States Secretary of State Marco Rubio in the US early on Wednesday, said that New Zealand supported the efforts to bring an end to the conflict.
“This conflict has had wide-ranging impacts and disruptions - for both those in the Middle East and further afield including in New Zealand and the Pacific region,” Peters said after his Washington meeting with Rubio.
“In the coming days and weeks, New Zealand will stand in support of all efforts to bring about a lasting, durable end to this conflict.”
Labour responses
Labour leader Chris Hipkins hoped the ceasefire would allow for a return to diplomacy amongst the parties involved in the war.
Hipkins said in the meantime the Government needed to help New Zealanders dealing with a high fuel prices.
“Even if this peace lasts, and even if the ceasefire lasts, the fuel crisis is likely to be with us for some time yet, so the Government needs to do everything that it can to prepare for the potential shortage of fuel should we get to that point.”
He said the Government should not support any form of tax on the Strait of Hormuz.
Labour’s foreign affairs spokesperson Vanushi Walters told The Post the two-week ceasefire would come as a “significant relief to those in the affected region and around the world”.
Walters said questions remained about whether all parties shared an equal understanding and commitment to agreement’s terms.
“We now urge all parties to work diplomatically toward a lasting peace with respect for international law and the permanent reopening of the Strait of Hormuz.”