Retail diesel prices

IBISWorld forecasts the average retail price of diesel to decrease by 4.9% in 2025-26, to 185.6 cents per litre. Global diesel prices remain closely tied to crude oil benchmarks and are still exposed to supply risks from the Russia-Ukraine and Middle East conflicts, but an expected loosening in world oil markets limits the upside pressure on prices. Institutions like the World Bank point to an oil price path that remains relatively low compared to recent years but is still subject to significant fluctuations. Growth in supply and softer industrial demand is set to cap prices even while geopolitical risks persist. According to Ministry of Business, Innovation and Employment (MBIE) data, average diesel prices fell by about 15 cents per litre between March and June 2025, reflecting lower international oil prices, a period of relatively competitive retail discounting, and slightly improved supply conditions that alleviated earlier cost pressures on importers and distributors. Prices have risen again due to rising global benchmark oil prices, local carbon and excise-related expenses, and reduced retail discounts, resulting in increased transportation and on-farm fuel expenditures for the 2025-26 fiscal year. According to the latest MBIE data, diesel consumption edged down slightly in June 2025 compared to June 2024 due primarily to weaker industrial demand. A continuation of this trend in demand throughout the remainder of 2025-26 would place downward pressure on prices.

Various factors influence retail fuel prices, such as crude oil production levels, government policy both domestically and in other nations, and downstream demand. The number of vehicles and the total amount of distance covered, particularly by freight transport, also determines demand. The world price of crude oil is priced in US dollars per barrel. Consequently, the domestic retail price of diesel is also influenced by changes in the value of the New Zealand dollar relative to the US dollar.

Retail diesel prices have fluctuated over the past five years, but have risen overall to due to rising global energy costs and robust domestic transportation demand. The era has been marked by dramatic price spikes due to worldwide supply restrictions and geopolitical tensions, followed by more recent drops as global oil prices have relaxed. Major oil-exporting countries' coordinated production choices and supply chain interruptions have significantly fuelled global crude oil prices. Large producer agreements and the Russia-Ukraine conflict have caused crude oil prices to rise, affecting New Zealand fuel prices. Consequently, crude oil prices soared following the outbreak of the war in February 2022 with the Brent Crude spot price reaching a decade high in June 2022. Prices have since moderated as global energy markets have reoriented. The latest Israel-Hamas war has also added to volatility in world oil prices. Additionally, New Zealand has witnessed growth in its number of licensed motor vehicles over the past five years, boosting fuel demand. Overall, IBISWorld forecasts the average retail price of diesel to fall at a compound annual rate of 9.5% over the five years through 2025-26.