March 16, 2026

#economy: Middle East crisis raises fears petrol could climb even higher in Aotearoa

Matthew Tukaki Posted On March 16, 2026

Petrol prices in Aotearoa could rise significantly in the coming weeks as the escalating conflict in the Middle East disrupts global oil supply and rattles international energy markets.

Global crude oil prices have already surged past US$100 a barrel for the first time in more than three years following military strikes and ongoing instability involving Iran, Israel and the United States. The spike has been driven by fears that the conflict could disrupt shipping through the Strait of Hormuz, one of the most important oil transit routes in the world.

Roughly 20 percent of the world’s oil supply normally moves through the narrow waterway between Iran and Oman. With tankers facing threats from missiles, drones and naval activity, many vessels have slowed or stopped transiting the area, raising concerns about global supply shortages.

In New Zealand, the impact is already being felt at the pump. Petrol prices in some parts of the country have climbed above $3 a litre, and analysts warn further increases could be on the way if the conflict drags on or expands.

Energy analysts say the relationship between crude oil prices and retail fuel is relatively direct. As a rule of thumb, every US$1 increase in the price of oil typically translates to around a one-cent increase per litre at the pump once refining, shipping and taxes are factored in.

How high could prices go?

Economists modelling potential scenarios say much depends on whether the Strait of Hormuz remains open.

Short disruption: Oil prices around US$100 a barrel could push petrol prices modestly higher in the short term.
Extended disruption: If shipping through the strait is blocked for weeks, modelling suggests oil could climb to around US$130 a barrel.
Worst-case scenario: Some global analysts warn prices could spike toward US$150 a barrel or more if major oil infrastructure is damaged or exports are halted for a prolonged period.

At those levels, petrol prices in New Zealand could climb well beyond current levels, with some industry observers warning the cost of fuel and freight would quickly flow through to the wider economy.

Higher fuel prices rarely stay confined to the petrol pump. Transport operators say rising oil prices push up freight costs, which in turn drive increases in the price of food, goods and other everyday items.

Because New Zealand imports most of its fuel, the country is particularly exposed to swings in global oil markets. Government agencies have acknowledged that any sustained increase in crude prices will eventually be reflected in domestic petrol and diesel costs.

To try to stabilise markets, the International Energy Agency has announced the release of hundreds of millions of barrels of oil from strategic reserves, but analysts say the move may only soften the blow rather than reverse the upward trend if the conflict intensifies.

For now, the biggest question remains how long the conflict will continue and whether key shipping routes remain open. If tensions escalate further, energy experts warn New Zealand motorists could face even higher fuel prices – adding fresh pressure to households already grappling with the cost of living.