Iran War Impact on NZ Economy vs National’s Fuel Crisis Response
The economic fallout from escalating tensions involving Iran is beginning to hit forecasts for New Zealand, with rising fuel costs, inflation and supply disruptions posing serious risks to households and the wider economy.
We have two huge forces approaching each other at enormous speed.
The reality of America’s illegal war in Iran on the NZ Economy vs Why National can’t protect us from the fuel crisis.
Westpac revises outlook as Iran conflict impacts NZ economy
Appearing on The Bradbury Group last Tuesday, Kelly Eckhold, (the Chief Economist at Westpac) was challenged on why Westpac had been so optimistic in their GDP forecast. After appearing on our show, he produced the very next day a much more dour reading on the impact on the NZ Economy of the illegal war in Iran…
Westpac economists have revised down their forecasts on the growing fallout from the Iran conflict.
They now expect the economy to shrink in the second quarter.
“We’ve pencilled in a fall in quarterly GDP of 0.4% in the June quarter,” said Westpac chief economist Kelly Eckhold.
The labour market would now remain weak through the middle of the year, with unemployment peaking at 5.6% and ending 2026 at 5.4%, Eckhold said.
“This will crimp the recovery in household spending and the housing market.”
House prices are now expected to fall by around 0.9% over 2026.
Sharply weaker confidence, employment and GDP growth would drive that weakness.
Westpac now expects that inflation will peak at 4.1% in mid-2026, and that it will remain above 3% through the first quarter of 2027.
The Treasury had previously forecast inflation at 3.7% as a worst-case scenario.
What rising inflation and unemployment mean for Kiwis
…4.1% inflation and 5.6% unemployment.
The Prime Minister did promise that this was the year of growth I suppose, but that it’s coming in the form of unemployment and inflation probably wasn’t what he meant.
Here’s the reality.
Iran is a theocracy run by religious fanatics. They welcome death. You can’t bomb fanatics into submission.
Trump has blundered into the worst geopolitical mistake since Vietnam.
How the Strait of Hormuz disruption affects fuel supply
Iran will keep the Strait of Hormuz closed.
What does that mean in reality to Kiwis?
Once the enormity of what has happened sinks in, companies will start using alternative sea routes round our refineries in Singapore and South Korea will need to source new supplies.
- The normal tanker time to NZ is 20 to 25 days.
- The US Gulf Coast → NZ is 30–40 days.
- From Singapore or South Korea it would be +5 to +15 days as they attempt to source extra fuels.
Why petrol prices could rise 20 to 50 cents per litre
So, even if we find new routes to bypass the Strait of Hormuz, petrol per litre at the pump will be permanently up anywhere between 20 to 50 cents.
The only way this goes back to any semblance of normal will be an immediate opening of the Strait of Hormuz with zero violence for at least three months, and it will still be three months after that for the infrastructure damage and supply chains to recover.
So that’s at least six months of good luck, zero violence and best case scenario playing out during which oil prices will be highly elevated.
That’s the best case scenario!
National’s political dilemma in responding to the fuel crisis
Into this crisis comes the National Party the National Party.
National have built their entire election narrative on Labour’s supposed feckless spending during Covid so can not actually do anything as we face this fuel crisis now, because it will undermine National’s election narrative.
It’s created a political paralysis, National dare not do anything lest it erode their own election talking points.
The entire construct is a farce because National are borrowing more than Labour did!
The danger for National is that if this isn’t solved quickly, their refusal to do anything meaningful will see voters turn on them viciously.
We are likely to run out of diesel by May.
National are too busy manufacturing covid grievance about the last crisis to fight this new crisis.
All National has is hope that Trump will manage to find his way out of a war he started.
When global conflict collides with domestic policy limits, the real cost is measured not in forecasts — but in what households pay every day.
It is Iran’s interest for this war to drag on to June when the FIFA World Cup gets underway in LA. They will want to ensure a credible threat on LA to scare people away from watching the matches, to sow chaos. The closer we get to June, the more likely it is that Trump begs and begs and begs Iran for forgiveness.
“Iran will keep the Straits closed.” Yeah, nah.
Panama tolls the Panama Canal.
Egypt tolls the Suez Canal.
Germany tolls the Kiel Canal.
Greece tolls the Corinthe Canal.
Russia tolls the Volga Baltic Waterway.
USA & Canada toll the St Lawrence Seaway.
And now Iran tolls the Strait Of Homuz. The toll is $2million per tanker paid in Yuan.
If NZ wants fuel we simply pay the toll.
But is NZ allowed to pay the toll?
So 4.1% inflation / 5.6% unemployment / chronic homelessness / increased drug dependency, the list is endless. But this is not about the fuel crisis, that has come later, so NO EXCUSES. This CoC has tanked our economy, ‘over fed’ their bribing voters, and are a long way into destroying NZ. But they still gormlessly claim it’s Labour’s fault they overspent on Covid, despite the CoC having spent more in less time! National hasn’t got a clue, never have, and never will. So it’s 50/50 – our vacuous CoC and the certifiably insane Trump/Netanyahu combination. Well done, seems a real NO WIN here. You voted them in, I didn’t, so you vote them out! Think about our country instead of your bank balance and assets you greedy, grasping parasites.
The voters will soon learn that the clowns in charge have no serious plan in place.
Again, I’m so thankful that these idiots were not in charge during COVID. They would’ve failed that leadership test too.