Petrol prices not expected to rise before Christmas despite BP halting shipments in Red Sea

New Zealanders are unlikely to see more expensive fuel at the pump despite oil prices rising sharply overnight, the Automobile Association (AA) says. 

The rising price came after oil giant BP hit pause on all shipments through the Red Sea following attacks by Iran-backed Houthi militants from Yemen. 

Brent crude oil sold for US$78.64 (NZ$126.44) a barrel on Monday - up 2.7 percent from the previous day. 

However according to Terry Collins, the AA's principal policy advisor, a rise in oil prices won't necessarily lead to higher prices at the pump in New Zealand. 

While geopolitical events, including the Russia-Ukraine war, had caused New Zealand petrol prices to skyrocket "of late, that's not been occurring", Collins told Newshub. 

"The Israeli-Hamas conflict is a good example of what would normally... add to volatility or price to the market, only lasts a day or two," he said. 

Collins expected the Houthi attacks to have much the same impact. 

"I see something similar to this having a very small impact for a very short period of time until things stabilise." 

Terry Collins.
Terry Collins. Photo credit: File

He told Newshub while the market was "a bit jittery" following the news of BP pausing shipments, $78 a barrel was still well-down from a couple of months ago. 

"We were around about $85 about two months ago - and these are for January contracts - so I can't really see it impacting our holiday period and, just based on the previous events occurring and not having the impacts they normally do, I just see this being another part of that uncertainty that will be addressed, and the market will stabilise around it." 

There was no need for Kiwis to rush to the pumps as a result, Collins insisted. 

"You don't need to be frenzied - do the sensible thing before the holidays that we always tell people to do; use your apps to get the cheapest fuel... drive safely, drive slowly - there's plenty of road works on the road right now so just take your time."