Drone attacks could push up petrol costs

Petrol prices could rise within days in New Zealand as a result of attacks by Yemeni rebels on Saudi Arabian oil facilities at the weekend, both BP and the Automobile Association have warned.

Houthi rebels launched drone attacks on the world’s largest oil processing facility in Abqaiq, Saudi Arabia, and the major Khurais oil field, sparking huge fires.

The Wall Street Journal reported the attacks had shut down half of the country’s oil production, which analyst Oilprice. com said would be equivalent to reducing global supply by about 5 per cent.

Oilprice.com suggested oil prices could spike above US$100 (NZ$156) per barrel in the wake of the attacks when oil markets reopened, up from their current price of about US$55 a barrel.

While Saudi Arabian oil company Aramco was confident it could recover quickly, if it couldn’t, the world could face a production shortage that could send oil prices ‘‘into the triple digits’’, it said.

BP spokesman Gordon Gillan said its prices were reflective of the oil price in international markets among other influencing factors ‘‘so it is possible there could be an impact on local prices later this week’’.

BP did not want to speculate further, he said.

‘‘We review our BP Connect prices every day so our prices are as competitive as possible,’’ Gillan said.

The cost of fuel accounts for only about a third of the price of petrol, with much of the remainder represented by taxes.

That meant prices at the pump would not rise as much as the price of oil but the impact ‘‘could be concerning’’, AA spokesman Mark Stockdale said.

‘‘It could have a negative impact which would inevitably flow through to the pump.

‘‘We have to wait and see but it is certainly not helpful. It is these sort of geopolitical events that can lead to fuel price spikes and they are outside the control of fuel companies, the Government and Kiwi motorists,’’ Stockdale said. Z and Mobil have also been approached for comment.

A barrel of oil equals about 159 litres, which means each sustained Us$10-rise in the price of a barrel of oil could be expected to push up the price of petrol, diesel, jet fuel and other derivatives by an average of about 10 NZ cents a litre.

Changes in the price of oil flowed promptly through to the pump prices of petrol and diesel, Stockdale said. A couple who ‘‘lost’’ $150,000 after a buyer pulled out of a deal to purchase their million-dollar home have won their bid to sue him, five years after the sale fell through.

Matthew and Tracey Strack agreed to sell their $1.2 million property in the upmarket Dunedin suburb of Maori Hill on February 24, 2014.

That sale to David Grey was conditional on him obtaining both finance and a written builder’s report by March 10.

But just two days after signing, Grey cancelled the agreement because the property had retro-fitted insulation in its wall cavities.

Despite a building inspector identifying no concerns with the property, Grey believed the insulation could add moisture to the house.

‘‘It later turned out that his concerns were ill-founded,’’ a decision by the Court of Appeal, released last week, said.

Grey had wanted to borrow the entire purchase price using a bridging loan from selling his existing home. He made preliminary inquiries but no loan was ever obtained, the documents show.

The Stracks cancelled the agreement on March 3, later reselling their property for $150,000 less than the agreed amount, prompting them to sue in order to recover the sum.

An earlier High Court decision found Grey had breached the contract for failing to obtain a written report that met the agreement’s requirements.

The couple disputed the judge’s decision to award only nominal damages – just $100 – based on Grey’s prospect of obtaining finance being so remote as to be negligible.

The Court of Appeal rejected that earlier judgment, concluding Grey would have not been able to get a valuation in time, or that his application to Westpac would have failed.

Evidence showed Grey signed the agreement believing he would get finance, approaching his bank manager, Craig Ross, for bridging finance pending sale of his Mosgiel property.

The court decision noted no loan application was ever prepared as Ross did not consider the financial information needed to recommend a loan to the bank’s credit division.

Ross’ evidence indicated that security cover would have been an issue because Grey was borrowing the full purchase price, but no evidence of the value of his home or business assets was shown.

The Court of Appeal found Grey failed to show that he would not have succeeded in raising finance. He was ordered to pay the Stracks $150,000 – the difference between the contract price and the price realised on sale, as well as costs.