Relief for Kiwi motorists may be on the horizon, with Westpac economists forecasting that petrol prices could drop below $3 a litre for 91-octane fuel if the Iran-US peace agreement remains in place. This offers households and businesses a welcome break from the cost-of-living pressures caused by international conflict and supply disruptions.
Global oil prices have fallen about 4% following a US-Iran agreement to end hostilities. Brent crude has fallen to US$84 (NZ$143) a barrel, extending a downward trend that began on Friday.
Westpac chief economist Kelly Eckhold said the agreement was positive news for New Zealand, with lower global oil prices expected to translate into cheaper fuel at the pump. He said reduced energy costs could help ease pressure on household budgets, strengthen consumer confidence, and encourage greater business investment and economic activity.
“Based off the pricing on Friday night, we sort of estimated perhaps 91 around $2.80 or $2.90 would be reasonable,” he said.
“Actually prices have fallen a bit further since then, so you know that looks even more likely, as long as these oil futures can sustain these prices for a week or two.”
While New Zealand’s economy is expected to have recorded negative growth in the second quarter, Eckhold said a lasting peace deal could rapidly restore confidence and support a turnaround.
However, Eckhold cautioned that it was still too early to declare victory, noting that the economic outlook would depend on how the details of the agreement unfold.