OPEC signs point to relief at the petrol pumps as summer holidays and road trips arrive
The odds on cheaper petrol prices for the Christmas holidays just got better as OPEC talks in Vienna ended without a deal on oil production cuts.
Crude oil prices slumped as much as five per cent in initial trading this morning.
The crude oil price surged so much this year it sparked fears about petrol heading towards $3 a litre. Then it crashed so hard we are now more likely to see it below $2 a litre by Christmas.
Oil prices peaked in early October, which coincided with a fall in the kiwi dollar and new fuel taxes to hit drivers in the pocket.
But in a dramatic market shift — which caught many traders off guard — oil prices have slumped in the past two months.
They have fallen as much as one third since a peak on October 3.
The kiwi dollar has also bounced back — up about 7 per cent since the start of October.
Drivers have already enjoyed 12 petrol price cuts since a peak in October, but there were more to come, says market analyst David Lewis of Milford Asset management.
“Part of the reason that the price got so high was concerns about sanctions on Iran and a reduction of supply out of Iran,” he said.
“Then more recently we’ve seen Trump encouraging Saudi Arabia to continue producing at a higher level to try and keep that oil price down.”
Trump wants a lower price to support the US economy and had quite a bit of leverage right now in the wake of the revelations about Saudi involvement in the murder of journalist Jamal Khashoggi, Lewis said.
But a 30-40 per cent swing in the oil price as we’d seen in the past few months was unusual, he said.
After the OPEC meeting, Saudi Energy Minister Khalid Al-Falih said he wasn’t confident of an agreement after discussions of a million-barrel-a-day output reduction concluded unresolved.