Global crude oil prices soared more than 10% last week to the highest level in a month, after the grouping of some of the world’s largest producers agreed to slow production for the first time since 2008 in a bid to support prices.
AA PetrolWatch spokesman Mark Stockdale said after the price of fuels in New Zealand rose 3c a litre a week ago and then another 3c yesterday, the latest global hike created ‘‘plenty of uncertainty’’ for motorists heading into the holiday season.
"We shouldn’t be surprised if this [crude price rise] is reflected in increased refined costs, even overnight," Mr Stockdale said.
National prices after the last hike sit at $196.9 for 91, $2.059 for 95 and $1.26 for diesel.
Mr Stockdale noted that a year ago crude prices were on their way up.
"The signs are definitely not looking good. There’s some expectation refining costs will follow," he said.
Opec (the Organisation of the Petroleum Exporting Countries), which accounts for a third of global oil supply, has agreed to cut production by around 1.2 million barrels a day, or more than 3 %, to 32.5 million barrels a day from January.
Traders and analysts overseas said crude prices were unlikely to skyrocket further in reaction to the deal, and the rally might even be short-lived.
Mr Stockdale noted Opec members were not due to begin cutting production until January, and even then all the parties had to keep their side of the bargain.
Opec’s de facto leader, Saudi Arabia, said it would take the lion’s share of cuts and reduce output by almost 500,000 barrels a day to 10.06 million barrels to get the deal done.
Iraq, Opec’s second-largest producer, which has previously resisted cuts, agreed to reduce output by 200,000 barrels to 4.35 million barrels.
Iran was allowed to boost production slightly from its October level. This was a major victory for Teheran, which has long argued it needs to regain market share lost under Western sanctions. Non-Opec member Russia, which has long resisted cutting output and has pushed its production to new record highs in recent months, agreed to cut output by 300,000 barrels. Opec will have a meeting with non-Opec producers on December 9.
Director of managed futures at IITrader.com Oliver Sloup said in the past not all producers had complied with agreements on supply cuts. As a result, there was scepticism over how stringently the production caps would be adhered to.
Kuwait, Venezuela and Algeria have agreed to monitor compliance with the Opec agreement.
Director of research at Wisdomtree Viktor Nossek said US production capabilities also might mute the price reaction.
"While prices may climb further in the very near term, we expect any gains will be short-lived, with US production likely to ramp up to exploit higher prices," he said.
— Additional reporting Reuters
