Finance Minister Nicola Willis said the Government was closely monitoring fuel supplies and global markets as conflict in the Middle East drives sharp price increases and raises concerns about future fuel availability for New Zealand.

Speaking at a media briefing, Willis said ministers were meeting daily to assess the situation and coordinate the country’s response as global energy markets react to disruption in the region.

Officials are focusing on three key areas: protecting supply chains for critical goods, preparing for possible freight and logistics disruption, and managing the economic impact on households and businesses.

Fuel remains the most immediate concern, alongside fertiliser, plastics used for export packaging, and bitumen used in road construction.

Data published by the Ministry of Business, Innovation and Employment shows New Zealand currently has fuel coverage of 57 days for petrol, 49 days for diesel and 47 days for jet fuel.

While not all of that fuel is physically in New Zealand yet, Willis said a significant portion is already on ships heading to the country.

“As of yesterday, 13 vessels were safely on their way here, with a further three safely scheduled to depart,” she said.

Channel Infrastructure, which operates the country’s largest fuel import terminal at Marsden Point, has told officials shipments are continuing to arrive and depart as scheduled.

However, global oil prices have already pushed fuel costs sharply higher.

Petrol prices have increased by about 45 to 50 cents per litre, adding around $23 to the cost of filling an average car. Diesel prices have climbed about 72 cents per litre, increasing the cost of filling a typical diesel vehicle by about $36.

“We are acutely conscious of the impact this will be having for many New Zealanders,” Willis said.

New Zealand imports most of its refined fuel from Asian refineries, particularly in Singapore and South Korea. Those refineries rely heavily on crude oil from the Middle East, meaning prolonged disruption could tighten global supply.

“In terms of having to move to any further mitigations under the National Fuel Plan, that’s at least three to four weeks away,” Willis said.

She said most companies had already secured their current shipments but were now entering a period where future supply could become more competitive.

“Many of them already have orders in that are currently covered, but they don’t, of course, have orders out into the never never.”

Willis warned that if the conflict continues to disrupt oil flows through the Strait of Hormuz, which carries a large share of global oil shipments, there could be intense competition among fuel buyers.

“We’re conscious as we look out to a world where global fuel supply is far more constrained, particularly out of the Southeast Asian nations from which we import, that there may be a real race on to get those orders fulfilled.”

In the first instance, she said fuel importers would likely compete by paying higher prices to secure supplies.

“In the first instance we would expect fuel importers would compete on price. That is they will pay more to secure those orders in future.”

Companies may also begin seeking supply from new refineries or regions.

“In the second instance they may wish to look more broadly beyond the refineries they currently rely on to look at other sources of fuel from around the world.”

This could require regulatory adjustments.

“It may also be the case that in doing that they say to us well to give us more options about where we buy fuel from could you have a look at broadening the fuel specifications please.”

Willis said officials were also exploring ways to cooperate with regional partners to ensure adequate fuel supply.

“It may also be the case that New Zealand working with Australia and Singapore could work to secure more supplies for this region of the world.”

“This is a diplomatic effort in part. New Zealand is working around the clock through our diplomatic networks to make sure that both on the one hand our needs in terms of ongoing fuel supply are understood and prioritised.”

“At the same time we are working with other nations who are just as affected by this as we are to say how can we work together to ensure that the fuel security of all of our nations is protected.”

Officials are also preparing for potential disruption to global shipping routes, insurance costs and air freight capacity.

The Ministry for Primary Industries has already helped exporters redirect shipments originally destined for the Middle East to other markets by issuing new food safety certificates so goods can enter alternative destinations.

Willis said fertiliser supply was currently stable, although prices were rising sharply.

Industry data shows the price of urea fertiliser has increased 54 percent over the past year to US$591 per tonne, which could increase costs for farmers and eventually food prices.

Officials are also checking stock levels of plastics used for food packaging and exports, particularly among smaller businesses.

Bitumen supplies used for road construction are also under review, with officials estimating around 93 days of working stock currently held at ports.

The Government is also assessing the wider economic impact, including pressure on household budgets as fuel and freight costs rise.

Willis said she had spoken with the chief executives of New Zealand’s major commercial banks, who assured her they would work with businesses facing financial pressure.

“They have assured me that in the first instance they will be providing an umbrella to businesses that they already work with to ensure that they can take them through this challenging time.”

Any government support would be designed to be temporary and targeted, she said. Officials had advised against reducing fuel excise taxes as a response to rising prices.

“We’re conscious that the world is in an environment where fuel supplies have been limited,” Willis said.

“In that situation dramatically reducing prices in a way that would encourage people to use more of something would not necessarily be prudent.”

Looking further ahead, Willis said global refineries may increasingly seek oil from alternative sources if Middle East supply remains uncertain.

“One is the release of US strategic reserves. Another is the release of Japanese strategic reserves.”

“It is also the case that some of them may look to Russian cargoes of oil many of which are already on the water.”

She said New Zealand had not been asked to reconsider sanctions related to Russian oil.

“We have not been directly asked by any of the countries who we currently import fuel from to consider easing those sanctions.”

“But as we look ahead it is always possible that that is one of the avenues that refineries go down as they’re seeking more sources of oil.”