NZ fuel supplies face increased risk, and no price relief

NZ fuel supplies adequate and unaffected by latest Middle East conflict developmentsGlobal stocks and supplies to remain pressured for foreseeable futureThe safety margin for fuel supplies is getting thinnerChallenge to NZ is not fuel supply but price, which will stay high until market rebalancesThe head of the country's biggest fuel importer says supplies are flowing as normal and expected but the risks have increased, while there is no prospect of significantly lower prices.Supply lines from the Middle East through the Strait of Hormuz and the Saudi Arabian pipelines have been further pressured in the past week by the US-Iran conflict and the broader involvement of the Iranian aligned Houthi in Yemen.Z Energy's chief executive Lindis Jones said New Zealand's fuel supplies have been flowing normally and meeting local demand."Supply remains secure, fuel is still moving, it's just taking longer and is more expensive to move, so it's just a story of price not supply security."However, Jones said the risk margins for supplies have narrowed."While system is coping the safety margins are thinner, so inventories are being drawn down, some refineries are deferring maintenance to keep operating and that reduces the market's ability to absorb another disruption."Z Energy chief executive Lindis Jones.SuppliedNo price relief in sightJones was loath to predict prices other than to say a continuation of current conditions would underpin higher prices.He said prices were being driven by headlines and while that continued they would remain elevated.Jones said even after the end of the conflict prices would remain high until the global fuel market rebalanced."It will take quite some time for the system to recover. Ships need to get into the right place, refineries need to do maintenance, products need to start flowing, and we're still unclear about the level of damage to facilities in the Middle East."This is a tough time for business and households in terms of elevated fuel prices and I believe it will be some time before prices return to normal."Jones said he accepted the view of a top official at MBIE handling fuel supplies, who recently told RNZ he was reasonably confident that New Zealand would avoid fuel supply shocks.Latest data from MBIE as of 6 September showed New Zealand had nearly 52 days of petrol stocks in the country or in transit, close to 51 days of diesel, and 49 days of jet fuel.