Petrol prices may rise soon as foreign sanctions bite

Petrol prices across the country will likely rise soon as US-Russia tensions ratchet up and the New Zealand dollar weakens. It fell as far as US55.5 cents recently, according to a New Zealand Herald article.

Fresh US sanctions against Russia’s energy industry have forced up the price of Brent crude in recent days to above $US80 per barrel.

Petrol prices at present range from $2.68 a litre of 91 to $3.04 for 98 and diesel is at $1.95. Those are all up by a few per cent overall compared with a month ago.

Since mid-December the price of oil has increased by US$10 a barrel. So expect prices here to rise by 10-20 cents a litre soon.

Evidently the US Government has put sanctions on the Russian shipping fleet and the insurance associated with that, according to the AA.

Russia has been buying up old oil tankers so it can supply markets like China and India. But if these ships are uninsured, international ports won’t accept them. So India and China might need to go to the Middle East once again for their oil.

There is also a degree of uncertainty about the incoming US administration and its impact on energy and geopolitics.

While petrol prices will have little effect on local businesses that don’t rely on petrol or diesel, the harvesting season for many crops is about to begin. Such activity relies heavily on diesel which is becoming more expensive. Balancing that is a better price for exported goods as the dollar value falls against the greenback.

Given OPEC wants oil prices to sit around $US80 per barrel, Kiwis should be used to paying a bit more for petrol this year.