Iran Oil Crisis: Why NZ’s Car Dependence is Now a Strategic Liability
Petrol prices in New Zealand have surged past NZ$3 a litre, with some stations reporting supply shortages, as the escalating conflict in Iran effectively closes the Strait of Hormuz – a critical artery for global oil shipments.
The disruption, impacting an estimated 20 percent of the world’s oil supply, prompted the International Energy Agency (IEA) to announce the largest coordinated release of strategic reserves in its history: 400 million barrels. Despite this intervention, analysts warn that crude oil prices could reach US$150 a barrel if the Strait remains blocked, according to the IEA’s latest assessment in February 2026.
New Zealand, which imports all of its refined fuel – primarily from South Korea and Singapore – is particularly vulnerable. These refineries depend on crude oil transiting the Strait of Hormuz. Official fuel stock data indicates the country holds roughly 52 days of total fuel cover, with less than 33 days of petrol reserves. These reserves, yet, are designed to mitigate short-term disruptions, not a prolonged supply crisis.
Reports are emerging of motorists hoarding fuel, with Auckland petrol stations experiencing runs on fuel cans. The situation is prompting renewed scrutiny of New Zealand’s energy security and its reliance on imported fossil fuels.
New Zealand generates over 85 percent of its electricity from renewable sources, a figure that reached a record 96.4 percent in the final quarter of 2025. However, the transport sector remains overwhelmingly dependent on imported oil, accounting for nearly 40 percent of the country’s total energy consumption. Electricity currently provides only 0.5 percent of domestic transport energy.
The current crisis highlights the consequences of the 2022 closure of the Marsden Point oil refinery, which previously processed some crude oil domestically. Since then, New Zealand has been entirely reliant on imported refined products.
Efforts to accelerate the adoption of electric vehicles (EVs) have stalled following the dismantling of the Clean Car Discount scheme at the end of 2023. The scheme, introduced in 2021, had provided rebates for the purchase of cleaner vehicles, resulting in 192,000 rebates issued and a more than 50 percent annual growth in EV fleet size while active. Following its cancellation, EV growth has slowed to under 10 percent.
The government is also reportedly considering scrapping the Clean Car Standard, the remaining mechanism for incentivizing the import of lower-emission vehicles. This move follows the withdrawal of funding for Auckland’s discounted public transport fares for under-25s and children, and the effective cancellation of the Transport Choices program, which supported walking, cycling, and bus infrastructure improvements nationwide.
Significant investment continues to be directed towards roading projects. The current National Land Transport Plan allocates approximately $6.18 billion to state highway improvements, compared to roughly $391 million – or 1.7 percent of the fund – for walking and cycling initiatives. Seventeen major highway projects, collectively estimated to cost between $44 billion and $56 billion, are underway, despite warnings from the Infrastructure Commission in mid-February that the program is unaffordable.
The escalating situation in the Strait of Hormuz underscores a long-standing vulnerability for New Zealand. Each previous oil shock has presented an opportunity to reduce reliance on imported oil, but past responses have largely focused on short-term fixes rather than systemic change.
New Zealand currently has 815 light vehicles per 1,000 people, one of the highest rates globally. Road transport emissions have increased by 82 percent since 1990. The country now faces a critical juncture, with the potential to prioritize sustainable transport solutions or continue its dependence on volatile global oil markets.
European leaders, alongside Japan, have pledged to work towards securing the Strait of Hormuz, expressing a “readiness to contribute to appropriate efforts to ensure safe passage” through the vital waterway. They condemned recent attacks on commercial vessels and oil and gas facilities by Iran, citing UN Security Council Resolution 2817 and signaling a potential intervention. The IEA’s coordinated reserve release and calls for increased oil production from other nations are also underway.