Asia's Oil Shock : Impact on NZ

The war in the Middle East has sent shockwaves through Asian energy markets, and the ripple effects are no longer theoretical — they are here. The International Energy Agency has characterised the 2026 Iran war as the "largest supply disruption in the history of the global oil market," and New Zealand, along with Asia, is now dealing with the  consequences.

Prices at the pump

The numbers are already stark. NZ fuel prices have climbed by around 55 cents per litre for petrol and 90 cents per litre for diesel since the start of the war. Petrol has gone over $3.30 a litre on average across the country, and on Auckland's Waiheke Island, locals protested after prices at a local station exceeded $4 a litre.

Finance Minister Nicola Willis unveiled a four-phased Fuel Response Plan 2026, with New Zealand currently sitting at Phase 1 — a monitoring and information phase — while fuel companies have secured imports through to the end of May. Phase 2 would see homes, businesses and the public sector pushed to save fuel. Phase 3 would see fuel prioritised for life-preserving services, and Phase 4 would see stricter intervention in fuel distribution.

The government has also temporarily aligned New Zealand's fuel specifications with Australia's to improve access to different fuel markets, giving importers access to a wider range of shipments and reducing the risk of supply disruptions caused by minor technical differences.

As of the most recent MBIE update, New Zealand has 59.3 days of petrol available, 54.5 days of diesel, and 50.4 days of jet fuel. Of course depends on the driving habits of kiwis to some extent, with many people opting for the train or the bus as prices leap.

Refineries in Singapore, Japan and South Korea — which supply the fuel New Zealand imports — are now operating at reduced capacity, processing crude at a slower rate to stretch remaining stocks. The real risk, according to maritime intelligence analysts, will come if oil tankers from those Asian refining hubs were diverted to competing and better-paying markets as fuel supply tightened.

The structural vulnerability

The crisis has exposed a critical weakness in New Zealand's energy infrastructure. Since the Marsden Point refinery was closed in 2022, New Zealand has imported all its refined fuel, mostly from South Korea and Singapore. Those refineries rely on crude oil shipped through the waters now blocked by Iran. In effect, as one analyst put it, New Zealand has a double exposure: higher global prices and the risk of delayed or diverted supply.

Marsden Point, it should be noted, would not have solved the current crisis — the bottleneck is getting crude oil out of the Gulf, not the refining step itself.

In place of a functional rail freight system, New Zealand has in the past few decades pinned its economy to a diesel truck fleet which now faces considerable price hikes.

Diesel has risen faster than petrol and its impact is wider. Almost everything consumers buy at the supermarket has been on the back of a diesel truck.

Prime Minister Christopher Luxon has identified diesel as "the key pacing item" in the crisis, noting it "powers up so much of our economy." For farmers, the squeeze is a double blow: higher fuel costs plus higher fertiliser costs — since the Strait of Hormuz also carries significant volumes of liquefied natural gas and fertilisers — squeeze farm margins from both sides. Food prices follow, with fresh fruit and vegetables particularly vulnerable.

The Asia squeeze and what it means for exporters

New Zealand does not exist in isolation from the broader regional picture. The Philippines, South Korea, India, and Thailand — all our major trading partners — are being hit simultaneously by surging oil prices and weakening currencies. LNG spot prices in Asia increased by over 100% after Iran struck Qatar's Ras Laffan LNG complex in March, causing a 17% reduction in Qatar's LNG production capacity. Further damage to such facilities in the Gulf seems highly likely.

While New Zealand no longer imports crude oil from the Gulf region, countries in Asia from which we import refined product have high dependencies on the Middle East for their oil supplies. Rising oil prices won't just show up at the Kiwi petrol pump — they will wash through the economy via rising business costs for transportation, energy-intensive goods such as fertilisers, airfares, the list goes on.

When Asian economies slow, demand for New Zealand's primary exports — dairy, meat, horticulture, timber, and seafood — tends to fall with them. Tourism is another pressure point: the financial anxiety spreading through Asian markets is already prompting travel cancellations, and the travel agents expect inbound visitor numbers to New Zealand to weaken.

What Next ?

The immediate indicators remain the same as they have been since February: whether Iran ends its effective closure of the Strait of Hormuz, whether diplomatic efforts produce a ceasefire, and how quickly the IEA's reserve release feeds through to Asian refinery output.

Despite the insistence of Donald Trump. Iran has to date rejected US ceasefire proposals and stated it has its own demands for ending the fighting. Mr Trump has now suggested that the US will leave Iran with or without a “deal”, and that the departure of US forces will see the oil price begin to “tumble”.

The official entry of the Houthis into the war in the last week can only mean further disruption to global shipping, with commercial vessels now avoiding the Bab al-Mandab Strait and the Suez Canal route in preference for the very long voyage to Europe and the US, via the Cape of Good Hope at the bottom of Africa.

For New Zealand households and businesses, the government's message is clear: supply is currently stable, but prices will keep rising, and the plan for a more challenging scenario is being prepared now. The buffer is real — but it relies, as Finance Minister Willis has herself acknowledged, on the fuel ships continuing to turn up.

Asia Media Centre