Oil supplies 'more precarious' now than Middle East war outbreak - expert

Oil prices have continued to rise in the wake of the renewed conflict between Iran and the United States.

Energy expert and former manager at the Marsden Point Refinery David Keat is referring to it as "hot fighting" after the cooldown. He told Morning Report while attacks had resumed, the fundamental strains between Iran and the United States and Israel hadn't changed at all so the conflict was likely to continue for months.

It comes as new research shows New Zealanders are worried about the impact the Iran war is having on their finances, even before the war resumed this week.

In Asian trading on Wednesday Brent Crude has climbed a further another 1.5 percent to US$84.50 (NZ$145.50) a barrel.

Also today, US President Donald Trump stepped back from a proposal to charge a 20 percent fee to guard the Strait of Hormuz as part of the conflict with Iran, saying he would instead seek investment deals with Gulf states.

US forces have carried out waves of attacks for the third night in a row after Tehran said it had closed the strait, prompting Trump to reinstate a blockade of Iranian shipping and propose the fee.

But just a little under five hours before it had been due to take effect, Trump said the strait was open to all shipping traffic except that of Iran.

While "quite a number of ships [carrying oil] got through" during the pause in fighting, Keat said it should also be remembered that supplies of fertiliser, other agricultural goods and helium were also being disrupted.

The situation was now "more precarious" for the global economy than when the war started on 28 February because then there were reserves of oil around the world.

"Nearly all of that's gone. So now although there may not be concern for physical supply to New Zealand in the short-term, it doesn't take much to tip things over the edge and the price will spike very high," Keat said.

Alternatives routes and sources of supply were ramping up, however, the Ukrainians have almost completely shut down Russia's refining industry.

"Basically the whole situation is [like] you have no insurance on your house and there's a storm coming towards you."

He would not predict how high prices might go for New Zealand motorists.

Keat believed the US and Israel didn't have a strategy for the war, while the Iranians were being very strategic and were now concentrating on attacking US airbases and support systems throughout the Middle East.

It was significant their attacks this week included one in Oman which was "the Switzerland of the Middle East".

It indicated Iran was determined to keep control of the Strait of Hormuz.

Keat said the situation was unlikely to return to how it was before the war started and Iran was likely to emerge with "some kind of commercial reward" after hostilities ceased.

Motorists cut their mileage

New research shows most New Zealanders are worried about the impact the Iran war is having on their back pockets, even before President Trump declared hostilities had resumed this week.

One of the big four banks is predicting it could be many months before fuel prices settle down.

A nationally representative survey of 535 people, conducted last Tuesday, found 60 percent of people were worried about the conflict impacting their bottom line.

That's down from 80 percent and 76 percent when the same survey was run in March and April respectively.

More than 40 percent of those surveyed reported driving less, while just over 30 percent were changing how they shoppled for groceries, and 25 percent were cutting discretionary spending.

Westpac managing director of institutional and business banking Reuben Tucker told Morning Report the uncertainity was leading to subdued consumer demand and supply chain issues.

He said it was likely there would be elevated prices at the pump for at least another three months, with a lag effect on supply chains for many businesses well into next year.

"We'd see a tail of about nine to twelve months into 2027," Tucker said.

Levels of concern about the financial impacts of the war were still very high at around two thirds of respondents, but had dropped from earlier in the year.

He said individuals and businesses were adapting where they could by cutting costs, delaying big purchases and borrowing more.

Businesses most exposed to high prices, including those in the transport, manufacturing and agriculture sectors, were still reporting tough conditions, he said.

But Tucker said there were some signs of recovery as the slow increase in household confidence drove a lift in discretionary spending.

"In other words, people are splashing out on those plane tickets or a new pair of shoes that they might've held back on three months ago."

There has been little reaction yet to the recent surge in oil prices at the pump in New Zealand.

According to fuel monitoring website Gaspy the average price of a litre of is $2.94, however, AA spokesperson Terry Collins has said prices are likely to have got as low as they are going to get in New Zealand for now.