NZ officials 'reasonably confident' fuel supply will hold despite Iran crisis

Six months into a conflict that shuttered one of the world's most critical shipping lanes, New Zealand's top fuel official sits down to explain why the country has not run dry. Iain Cossar, who took over the fuel supply response at the Ministry of Business, Innovation and Employment in early April, describes himself as "reasonably confident" that New Zealand will avoid fuel shortages—a striking measure of calm given what he calls the country's exposure to disruption. "We were probably one of the most exposed to a Hormuz closure and were rightly quite worried about what that might mean for actual supply," he says.

The crisis began in February when the US and Israel launched attacks against Iran, leading to the closure of the Strait of Hormuz. The Department of Prime Minister and Cabinet immediately convened an all-of-government response group spanning eleven agencies. Treasury took the lead on price impacts; MBIE led the supply side. At the peak, officials were meeting every morning at 7:30. The stakes were enormous. Nearly 20 percent of the world's oil transits the Strait—roughly 20 million barrels a day—mostly flowing from Middle Eastern producers to Asia. Global production sat at about 106 million barrels daily against consumption of 104 million in 2025, leaving almost no margin for error.

New Zealand's vulnerability ran deep. The country has not refined oil onshore for years and depends almost entirely on Asian suppliers: Korea, Singapore, Malaysia, and Japan provided more than 90 percent of the fuel consumed in 2025. Ships take roughly three weeks to reach New Zealand from those ports. The country operates on a just-in-time model, holding about 50 days of fuel in total—roughly 20 days offshore—with shipments booked up to three months in advance. It is a system that works only when nothing breaks. In six months, only one shipment was delayed, and that was because the vessel diverted to a more profitable destination. Within six hours, replacement fuel from another supplier was sourced and dispatched to New Zealand.

But the risks cut both ways. While too little fuel could cripple the country, too much posed its own trap. If New Zealanders cut consumption to save money during the crisis, ships arriving with jet fuel or petrol might find nowhere to offload. A large tanker sitting idle at dock becomes expensive fast. Cossar describes the Strait's closure as delivering an economic shock "consistent with, and I think slightly higher maybe, than the supply shock of the '70s." Yet several forces prevented catastrophe. Markets adjusted with remarkable speed, redirecting oil flows to buyers who could pay. More product flowed out of the Middle East than anticipated, through alternative channels and even through the supposedly closed Strait itself. Southeast Asia and poorer nations cut consumption. China reduced imports by a third to a half, easing global demand by roughly 5 million barrels a day. New production came online elsewhere—the US, Kazakhstan, and Brazil added about 1.2 million barrels daily. The International Energy Agency released 400 million barrels from global strategic reserves; by early August, 300 million had reached markets.

Oil never stopped leaving the Middle East. Ships went dark, shutting off identification transponders to avoid detection. By August, the pre-conflict rate of 55 transits daily had fallen to about 10, but smaller vessels would slip through and transfer cargo to larger tankers in open water. The US military ran convoys at night in coordinated groups. Overland pipelines absorbed the load: the East-West pipeline across Saudi Arabia and the UAE carried up to 7 million barrels daily; the Habshan-Fujairah Pipeline moved 1.8 million barrels from Abu Dhabi to Fujairah; Saudi Arabia increasingly diverted exports through the SUMED pipeline and the Suez Canal. China played a role that Cossar describes as "quite critical," not just as a buyer but as a restrainer of demand. By cutting imports sharply, China "solved a third of our problem right there, globally." The size of China's strategic reserves remains partly opaque—particularly underground storage—but they are believed to be substantial, and current demand remains below pre-conflict levels.

Cossar acknowledges the uncertainty. Geopolitics continue to shift. Markets remain volatile. But he is not bracing for a supply shock. "We're reasonably optimistic we won't face a supply shock because we have seen world markets adjust, new supply has become available, and there is supply getting out of the Middle East that we weren't actually aware of," he says. New Zealand's regulatory framework is robust. Reserves were bolstered at Marsden Point. Shipments continue finding routes out of the Hormuz Strait and the Red Sea. Cossar is blunt about the country's position: "Some countries will continue to buy for those who can afford it, and those who can't, won't. Put bluntly, New Zealand is in the countries who could probably afford it. We won't like it and it will have impacts on us, but we'll still be able to afford fuel." The question now is whether that confidence will hold as geopolitical tensions remain unresolved and the world watches to see if the conflict reignites.