Westpac economist says Iran peace deal could push New Zealand petrol back below NZ$3 a litre
A Westpac economist told New Zealand public broadcaster RNZ that the roughly 4% drop in oil prices following the US-Iran peace announcement could push petrol pump prices below NZ$3 a litre in the coming weeks. The economist stressed that a durable easing depends on shipping flows returning to normal.
Westpac senior economist Satish Ranchhod told RNZ Business that New Zealand petrol pump prices on Monday were running between NZ$3.05 and NZ$3.25 a litre for 91-octane. They had climbed as high as NZ$3.40 over the three-week run-up in crude. Brent crude fell roughly 4% overnight following the peace deal announcement.
Ranchhod said that for pump prices to settle back below NZ$3 a litre, Brent would have to hold durably below USD 90 a barrel. The benchmark is currently trading near USD 95. The economist added that the New Zealand dollar's level against the US dollar remains a significant factor for pump prices, so currency moves could either amplify or offset the effect.
Higher petrol prices over the past three weeks lifted near-term inflation forecasts and shifted market expectations for the Reserve Bank of New Zealand's next rate decision. Westpac economists estimate that if the oil-price retreat holds into mid-August, headline CPI could come in 0.3 to 0.5 percentage points lower. This is not investment advice.
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