What US attacks on Iran mean for KiwiSaver, petrol prices
Photo:
Marika Khabazi
Escalation of the conflict in the Middle East poses a major threat to New Zealand's economy, commentators say - as well as households' KiwiSaver balances and petrol prices.
There were earlier warnings
that the conflict was having a noticeable but contained effect on oil prices - but that there could be a much more significant economic impact if the conflict broadened.
Infometrics chief executive Brad Olsen said the US attacks at the weekend were that scenario.
"It does obviously ratchet up tensions enormously. But the question now is how the Iranian side respond and if they respond as some of their advisers have been talking about and how they've responded sometimes in the past."
He said if there were attacks on US shipping, or attempts to limit access through the Strait of Hormuz, oil prices could spike.
"There's a question come Monday as the markets open how everyone will digest this. I don't think anyone is thinking that there's an easy ability to de-escalate, but I think it will hinge on the Iranian response.
"If they do ratchet up the tension further, if this starts to broaden out into shipping attacks, I think market expectations and worries about oil supply will increase substantially. The question is, just to what degree do you price this and how do markets look at that?"
He said shares in companies in defence-based industries could increase in value.
"Everyone will think the war's on and certainly so far there's nothing that would stop you thinking the same."
People might also shift to defensive assets, he said, such as utilities.
The fact New Zealand was sending a defence force aircraft and foreign affairs personnel into the region proved how concerned the government was, he said.
Shamubeel Eaqub, chief economist at KiwiSaver provider Simplicity, said there could be bumpiness ahead for households.
"So far market pricing is unexpectedly calm. Oil prices haven't increased very much, equity prices haven't changed much even though we had already seen the beginning of that escalation before the weekend started.
"But with the US involvement now the uncertainty is even higher than before."
He said the experience of the Gulf War in the 1990s showed the potential impacts. "The channels were two-fold... the first was around the price of oil and the second was really around the uncertainty in financial markets in general.
"Now, compared to the Iraq wars, the world is a lot less dependent on oil than it used to be, which is also true for New Zealand, so the oil intensity of the economy is less. It doesn't mean we are immune it just means we are less exposed."
He said it was not yet clear how sensitive financial markets would be but the bigger issue was the fear and uncertainty that would be created.
"That's what we tend to see when there is a risk-off, equity markets tend to fall … the New Zealand dollar tends to get more volatile. Quite often it weakens when people are more risk averse, which means it's generally speaking a net positive for exporters but a net negative for the rest of us because we tend to consume a lot of imported products."
He said it could take 12-18 months for the full effects of big geopolitical events to flow through.
"But the initial effect quite often tends to be very much fear-driven, financial markets-driven commodity price-driven things."
He said for most New Zealanders, the message was to "hang in there".
"The oil price - you have no control over it. We are price takers, so whatever you can do in your own control to be able to manage your transport [might help]."
He said when it came to financial markets, that was also generally out of an investor's hands. But if they were worried about their KiwiSaver accounts, they should remember that it was time in the market that would make the difference over the long term rather than short-term movements.
Koura KiwiSaver founder Rupert Carlyon said the biggest risk was to inflation.
"If it does turn into a broader Middle East war and potentially shutting down the Strait of Hormuz, they we are likely to see higher oil prices, which will flow through to everything and shipping delays making it harder and more expensive to import things here in New Zealand. The Reserve Bank will be watching this very carefully as anything that has the potential to skew inflation to the upside will mean a halt to further interest rate cuts.
"I suspect markets will open down in anticipation of the conflict, though as we have seen over the past few years, markets fear more about the prospect of conflict rather than the reality of it. We have already seen this playbook with Ukraine and Russia and Gaza and Israel. Definitely no need to worry or panic."
Sign up for Ngā Pitopito Kōrero
,
a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
an hour ago
- RNZ News
Google search changes turning web into 'wild west'
Google is transforming online search, and businesses wanting to get their websites in front of customers must change with it, according to a leading digital marketer here. The vast majority of searches online are done on Google, and the tech company began incorporating AI into its searches a little over a year ago. Last month its CEO announced a further step where the typical experience of getting links to websites would be gone entirely, replaced with an AI-generated article answering the search question. Auckland digital marketer Richard Conway says he has had to overhaul his business, moving from a focus on search engine optimisation to 'generative engine optimisation'. He says the ongoing changes to Google search are turning the web into something of a 'wild west' for those who operate businesses online. To embed this content on your own webpage, cut and paste the following: See terms of use.
RNZ News
an hour ago
- RNZ News
Morning Report Essentials for Monday 23 June 2025
politics conflict 5 minutes ago In today's episode, New Zealand says the Middle East crisis is extremely concerning and there are worries over the consequences of further actions, the United States says it has devastated Iran's nuclear programme, after its military bombed three nuclear sites on Sunday, In the US, several Republicans have posted statements in support of Donald Trump's move, while others say the President should have sought congressional approval first, instability in the middle east often raises the question of what could happen to fuel prices, and we cross the Tasman to get the latest from Kerry-Anne Walsh.
RNZ News
an hour ago
- RNZ News
Economies face a potential war shock: Surging oil prices
By Auzinea Bacon , CNN In this 2018 photo, an oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia. Photo: Ahmed Jadallah/Reuters/File via CNN Newsource The American economy faces the unwelcome prospect of reignited inflation after the United States launched strikes on three nuclear facilities in Iran . High oil and gas prices are a near certainty, experts say. The big question now: How long will the fossil fuels price spike last? Oil prices are expected to rise by about $5 per barrel when markets open on Sunday night (US Time), according to experts. "We are looking at $80 oil on the open," Andy Lipow of Lipow Oil Associates said. US oil hasn't closed above $80 a barrel since January and has largely hovered between $60 and $75 a barrel since August 2024. Relatively tame oil prices have lowered gas prices to below $3 a gallon in many parts of the country, a major source of price relief for inflation-weary consumers. It's unclear if any major spike in oil prices will be sustained for a long period. Oil prices have risen about 10 percent since Israel's surprise attack on June 13 and then fell on Friday after US President Donald Trump announced a two-week deadline on whether to strike Iran. "One shouldn't necessarily assume that just because the price of oil goes up, it's going to stay there. It doesn't," chief economist for the accounting firm RSM Joe Brusuelas said. The direction oil prices take is likely to depend on whether Iran's parliament decides to block the Strait of Hormuz, a key trade route that accounts for about 20 percent of the world's crude oil. On Sunday (US Time), Iran's Foreign Minister Abbas Araghchi said his country has "a variety of options" when deciding how to respond to the US attacks and a prominent adviser to Iran's supreme leader has already called for the closure of the Strait of Hormuz. President of consulting firm Rapidan Energy Group and former energy adviser to President George W. Bush, Bob McNally, said that should Iran cut off the world's oil supply by closing the strait, it would risk more military force from the United States and its allies. Iran could also attack infrastructure in the Persian Gulf that treats and exports oil and gas. "It's possible they will decide the only thing that can dissuade President Trump is the fear of an oil price spike," he said. "They have to actually create that fear." Appearing on Fox News, Secretary of State Marco Rubio called on China to prevent Iran from closing the Strait of Hormuz, adding that closing it would do more damage to other economies than the US economy. China buys a third of all oil that comes from the Persian Gulf, while the United States buys less than 3 percent. "I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil," Rubio said. Meanwhile, American consumers may soon feel a price shock at the pump. "It takes five days or so for stations to pass along the prices they see in one day. If oil markets do surge today and then tomorrow, it could start showing up at the pump in a matter of hours," vice president of petroleum analysis at GasBuddy - a fuel tracking platform - Patrick De Haan said. According to Lipow, should the Strait of Hormuz be affected, the price of oil could rise to $100 a barrel, which would raise gas and diesel prices by about 75 cents per gallon from recent levels. Meanwhile, US trade policies combined with the war with Iran "strongly suggest inflation will be moving faster and higher over the next 90 days," according to Brusuelas. Many mainstream economists argue that the low inflation of the spring represents a calm before the summer storm, when they expect prices to rise because of Trump's tariffs. - CNN
