High petrol prices have been spotted across Auckland. Photo / Alex Burton
High petrol prices have been spotted across Auckland. Photo / Alex Burton
As world leaders take a stance on the war in Ukraine by banning Russian oil imports, New Zealand motorists may begin to see petrol prices rise again.
The United States, Britain and oil company Shell have announced they are banning imports of Russian oil, the latest sanctions intended to punish Moscow for its invasion of the eastern European country.
President Joe Biden announced on Wednesday morning (NZ time) that the US' ban is toughening the toll on Russia's economy.
BP Greenlane East in Remuera has advertised petrol prices at over $3 a litre. Photo / Alex Burton
As countries begin to ban Russian oil, New Zealand's Motor Trade Association energy and environment sector manager Ian Baggott said pressure will be put on other exporters.
"What is happening with the Ukraine situation in Russia is probably in the top five oil exporters in the world, so countries that were getting oil out of Russia, they are now having to get oil elsewhere which is now creating pressure on those sorts of refineries which are starting to ramp up their production to meet the demand."
He said this will then be reflected in petrol prices.
Looking at Singapore Oil, one of New Zealand's sources of oil, Baggott said a barrel is sitting at about US$125 (NZ$183).
"It's adding to the cost of the imported product into New Zealand and that's got to be passed on to consumers, unfortunately."
ASB chief economist Nick Tuffley agreed and said if oil reaches $200 a barrel, petrol prices here could go up by 70 cents.
He said it will be determined by what Russia will export and what happens to the overall global supply.
"There are some energy experts that estimate if you completely cut off Russian oil from a global market which will be about five per cent of global supply then perhaps the price could hit $200 a barrel which will make us wince."
A BP station in Auckland's Remuera was advertising unleaded 91 for $3.25 a litre on Wednesday.
President Joe Biden announced a ban on Russian oil imports, toughening the toll on Russia's economy in retaliation for its invasion of Ukraine. Photo / AP
Biden's action follows pleas by Ukrainian President Volodymyr Zelenskyy to US and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion. Energy exports have kept a steady stream of cash flowing to Russia despite otherwise severe restrictions on its financial sector.
"We will not be part of subsidising Putin's war," Biden declared, calling the new action a "powerful blow" against Russia's ability to fund the ongoing offensive.
He warned that Americans will see rising prices, saying, "Defending freedom is going to cost."
The European Union this week will commit to phasing out its reliance on Russia for energy needs as soon as possible, but filling the void without crippling EU economies will likely take some time. The UK announced that oil and oil products from Russia will be phased out by the end of the year.
While motorists here may be feeling the pressure with petrol prices, Baggott said it is being felt globally as energy prices rise because the supply is not there.
But he said there are ways motorists can save on petrol.
