Over recent weeks we have seen significant movements in the global price of refined fuels driven by international events such as Russia's invasion of Ukraine.
You will have seen these global price movements flowing through to New Zealand and the impact of these increases at the pump.Given the sensitivity of these price movements, we wanted to provide some additional context as to the contributing factors given the swings in diesel and petrol pricing is higher than what may normally be seen.
Product cost
Global oil markets continue to experience volatility seen following Russian military action in Ukraine at the end of February, coupled with the impacts of embargoes on Russian Supplies and associated sanctions on Russian flagged vessels which has put further pressure on the global supply chain.
Z Energy (Z) have and continue to see increased price volatility across all grades and shipping as a result of this international event. Russia is the world’s second largest oil exporter, and its oil is of a grade that allows for very efficient refining of mid-distillate fuels such as diesel and aviation gas, which in turn has caused a spike in the costs to these grades.
While the barrel costs are in flux and a useful measure in part, it does not tell the entire story, given New Zealand purchases are based on the cost of Gasoil 10ppm (diesel) as opposed to simply the barrel price. We will continue to see volatility in the price of Gasoil for the short to medium term.
Security of Supply
Diesel, and overall fuel stocks are strong, and we do not anticipate any supply interruptions regardless of the global situation. The closure of the Marsden Point refinery and New Zealand moving to an Import Terminal System on April 1st has long been planned for, and scheduled deliveries are already on the water in line with our refined product needs.
We are ever conscious of the role our products play on New Zealand businesses and their ability to keep us moving. If you or your team have any questions whatsoever, please do not hesitate to reach out to your local Z account manager.In the meantime, we hope that this note goes some way to helping you understand what’s driving the current fuels environment, and trust that the current events driving uncertainty will settle down sooner rather than later so we can all get back to some degree of normality.
Ngā mihi nui,
Nicola Law
GM Commercial
Z Energy
