Petrol price hike picked

Motorists appear in line for a 5-cent to 10c rise in the price of petrol later this week, after oil prices lost some of their dramatic morning gains during afternoon trading yesterday.

But it may be a day or two before the direction of oil prices and the impact on petrol at the pump become clearer.

Brent Crude was trading up US$6 a barrel at just over US$66 at 3pm yesterday, in the wake of Saturday’s drone attacks on Saudi Arabian oil facilities. If that price increase proves to be sustained, motorists could expect petrol prices to rise by about 6c a litre.

OilPrice.com reported the price of Brent Crude initially jumped 20 per cent when the oil market reopened yesterday, before giving up about half of those gains. But there may be continued volatility ahead. Prices are spiking because of the attacks on Saudi Arabia’s oil facility at Abqaiq and its Khurais oil field, which cut Saudi oil production by more than half.

Z Energy had speculated on Sunday that the price of oil could go up by US$5 to US$10 a barrel in response to the attacks, which could translate into a 5c to 10c price-rise at the pumps. But analyst Platts forecast yesterday that the price of Brent Crude could ‘‘test the high US$70s’’ and said the price ‘‘could move higher still if Saudi output is curtailed for a more substantial period’’.

Speaking just before the oil markets reopened yesterday, Z Energy chief executive Mike Bennetts noted reports that Saudi planned to quickly restore a third of its lost oil output. ‘‘Every little bit they bring back on will moderate the price increase.’’

Some analysts have talked of oil topping US$100 a barrel if Middle East tensions grow further but a jump to that level would likely be shortlived as it would stimulate significant extra supply from North American shale oil producers.

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 per litre.

Bennetts said many countries, including the United States, had strategic petroleum reserves.

‘‘So I think if you did see significant price increases, the US would release from the reserve and the Chinese would probably stop buying, in my view, as they have some very good inventory right now – record inventories last time I looked.’’

BP spokesman Gordon Gillan said on Sunday that 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’’.

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

Mobil spokesman Rob Fitzgerald said it chose ‘‘not to speculate on future fuel prices due to the number of factors involved’’.