Major New Zealand petrol companies won't say when tumbling crude oil prices could be passed on to consumers

Major New Zealand petrol companies won't say when tumbling crude oil prices could be passed on to Kiwi consumers.

Oil prices dipped by more than 6 percent on Tuesday - with global benchmark Brent crude settling at about US$98 per barrel. Prices have been on a downward trend in recent days after hitting a 14-year high last week amid ongoing talks between Russia and Ukraine over a ceasefire.

COVID-19 lockdowns in China could also slow the current pace of fuel consumption, causing oil prices to drop. The country is currently reporting a soaring number of Omicron cases.

Oil trade has been extremely volatile since Russia invaded Ukraine in late February. Russia is the world's largest exporter of crude and fuels.

"There is still volatility in the prices," Automobile Association principal policy advisor Terry Collins said of the Brent crude prices. "[It's] jumping up and down $3 a day sometimes although down from those highs we saw a week ago."

Despite the pullback in oil prices, two major New Zealand fuel companies - Z Energy and BP - would not say when Kiwis will start to see petrol prices drop again.

New Zealanders already saw fuel prices drop this week when the Government cut gas taxes by 25c

"Z Energy reviews its pricing every day, with the cost of fuel at the pump being made up of a number of factors, including global market fluctuations and local competitive pressures. 

"Decisions regarding any appropriate changes (up or down) are based on those inputs. Z does not discuss nor disclose the timings of any such changes (up or down) as any future time-based reference could be considered price signalling to competitors," a Z Energy spokeswoman told Newshub.

Also asked when falling oil prices could be passed on to consumers, a BP spokesperson on Tuesday said: "BP acknowledges the current impact of fuel prices on Kiwi motorists and we worked on implementing the changes the Government announced yesterday across our BP network in advance of midnight [Monday].

"We continue to review BP Connect prices every day to ensure competitiveness in the market," the spokesperson said on Tuesday.

Leading New Zealand economist Shamubeel Eaqub told Newshub prices at the pump tend to drop between one and two weeks after the oil prices fall.

"So, once we use up the current fuel, we should see the global prices flowing through," he said. "Global crude prices make up around a third of the retail price so pump prices will not change by the same magnitude."

But Eric Crampton, chief economist at think-tank The New Zealand Initiative, believes prices decreases may be passed through less quickly.

Crampton said his "guess" was that companies wouldn't cut petrol prices until they start returning regular margins, "at which point companies would again be competing with each other for market share".

Russia's invasion of Ukraine has made it a tumultuous time for global energy markets.

It prompted the New Zealand Government to act on Monday, cutting fuel taxes by 25c per litre for three months - as petrol in many areas of the country skyrocketed above $3 a litre.

Reuters / Newshub.