How soon Kiwi drivers could see cheaper fuel after US-Iran peace deal

Author: NZ Herald,
Publish Date: Tue, 16 Jun 2026, 2:46pm

Fuel prices have been on a downward trend since May. Photo / 123rf

A US-Iran peace deal should bring some relief at the pump for Kiwi motorists, but don’t expect pre-war prices anytime soon, warns a fuel expert.

Terry Collins, AA’s principal policy adviser, told the Herald it could be 18 months before New Zealanders see the low prices that were in place at the beginning of this year.

“We’ve kind of gone through the worst of the prices,” he said.

“Since May we’ve just been watching a slow downward on average track of all the fuels.

“Our call to the oil companies is, just as quickly as they put the prices up at the beginning of the conflict, we want to see the prices coming down at the end.”

The price of Brent crude – the international benchmark – fell more than 4% to around US$82 ($141) a barrel on news that the US and Iran had agreed a memorandum of understanding on Monday.

Brent crude exceeded US$120 a barrel in the early months of the Middle East conflict.

“I think we’re going to settle somewhere around US$80 a barrel and what that’ll mean is maybe we get our 91 [octane] down to about $2.80 and diesel down to about $2.10 or under $2 on a good day,” Collins said.

“We’re not going to get back to the beginning of the year where [crude] was US$60 [a barrel].”

The average price of unleaded 91 sits at $3.15 a litre, down from around $3.48 in mid-April, according to fuel tracking app Gaspy.

At the onset of the conflict in early March, unleaded 91 was at $2.49.

Meanwhile, diesel has fallen from an average of $3.89 in April to $2.89.

Collins said if the Strait of Hormuz does open, hundreds of tankers will flee the Persian Gulf and head off to the refineries with their product.

“That will mean we’ll get a little bit of an additional increase in supply.

“We’ve never had an oil production problem, we’ve had an oil transportation problem.”

But there are still factors that could keep prices up a bit.

“A lot of the globe released their strategic reserves. They’ll need to be replenished so that will put a bit of upward demand again, depending on how quickly they want to do it,” Collins said.

He said there would also be a trade-off when it comes to oil tankers resuming transit through the Strait of Hormuz, in that “insurances will be higher, but the distance will be shorter”.

“If they decide they don’t want to go back in [to the strait] and risk getting caught again, then they’ll go to other producers of oil, in which case the shipping costs and time will be a bit higher.”