Petrol tipped to keep rising as pressure grows on crude oil

Petrol prices - already soaring after the fall of the New Zealand dollar - look set to rise further as crude oil approaches record levels not seen since Hurricane Katrina devastated United States oil fields last August.

Fears of nuclear standoff with Iran - the world's fourth biggest oil producer - and seasonal demand in the US sent crude oil past the US$70 ($112.54) a barrel mark in New York over the Easter break.

Oil reached a record US$70.85 on August 30, a day after Hurricane Katrina damaged oil platforms and refineries along the Gulf of Mexico.

At that time New Zealand motorists were still buffered by the strength of the kiwi. But since August the value of the kiwi has dropped by more than 10 per cent.

It was trading at US62.1c yesterday.

UBS chief economist Robin Clements said it was an ominous sign that prices had returned to these levels without a hurricane.

"We've still got another hurricane season to come in the US and we've still got peak driving season to come in the US," he said.

"Of course, last year we had the defence of the currency and that's been stripped away. So it's another twist of the knife."

Unless geopolitical issues like those with Iran - and to a lesser extent Africa - eased soon then it was a matter of when, not if, petrol companies would lift prices again, he said.

That would certainly mean another layer of inflationary pressure on the economy later in the year.

The higher costs would flow through airfares, transport costs and eventually packaging and other petroleum based products, he said.

"So just about everything."

In the US there was concern over the weekend that changes to US gasoline content will disrupt supplies as the summer driving season - which runs from May to September - begins.

Motor fuel with a chemical additive is being phased out and the fear is that logistical problems may occur as distributors add ethanol as a replacement.

Worries over supply from Iran, which pumps about 5 per cent of the world's oil, were compounded by Chad, in north-central Africa.

The country demanded that a US-led oil consortium pay it at least US$100 million by today or else it would halt its output of up to 170,000 barrels a day.

Crude oil for May delivery rose as much as US68c, or 1 per cent, to US$70 barrel on the New York Mercantile Exchange in after-hours electronic trading. That was the highest since August 31.