Fuel prices drop - and what's going on in Wellington?

Diesel prices have fallen below $2 a litre in some parts of the country, and some Wellington motorists buying 91 are paying less than $2.70.

Oil prices have fallen sharply since the conflict in the Middle East started to resolve.

ASB economists said on Thursday oil prices were near pre-war norms and vessels were travelling through the Strait of Hormuz with satellite signals on, which they said was a sign of growing confidence in passage safety. But the level of traffic is still not back to where it was before the war.

Transporting New Zealand said diesel had dropped below $2 a litre at some truck stops, which was the lowest price since the beginning of March.

"Fuel prices have been steadily falling on the back of lower commodity prices which are reacting to positive signs in the Middle East and now news of a signed peace agreement," policy and advocacy adviser Mark Stockdale said.

"The low diesel price at some truck stops is a welcome sign that prices might finally be coming back to normal, but diesel prices at most service stations are much higher. Fuel company margins on diesel are bigger than for petrol and there is scope for diesel retail prices to fall even further after a drop of around 30 cents a litre last week."

He said fuel companies' diesel margins were at their highest level since April and almost twice what they were before the Middle East conflict began so not all the oil price fall had been passed on.

"We should see diesel pump prices fall even further, and the truck stop price of under $2 a litre is a sign of what's possible at low-cost sites."

Gaspy price monitoring data shows the average for diesel across the country is now $2.56 a litre. 91 is $3.02 and 95 $3.20.

Spokesperson Mike Newton said diesel had reached a peak of $3.90. "There's been a $1.35 drop in diesel. It hasn't been quite so severe in 91 because there's that correction - diesel's supposed to be 70c below 91 and it got to being higher than 91.

"91 is down to just over $3… it's still tracking downwards at the moment. There's still a lot of uncertainty around whether things are actually resolved over there or not.

"Certainly driving around you notice every day it seems to be a few cents cheaper, it's heading in the right direction."

The cheapest sites for 91 at the moment are in Wellington. Mobil Express Lower Hut is at $2.64, and NPD Seaview and Porirua are $2.68, as well as Waitomo Tawa and U-Go Tawa.

"Wellington for the last couple weeks, they've been the cheapest stations in the country which is interesting. They're not really known for it… over the years you've had Rotorua was the hotspot for cheap fuel then I think Gull moved into the South Island and Central Otago was really cheap… and then Hawke's Bay was really cheap when NPD moved down there and you sort of get these bubbles but Wellington is never featured."

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