NZ economy 'on precipice' as markets wobble, oil price rises

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New Zealand's economy is on a "precipice", one economist says, as the country faces increasing pressure as a result of war in Iran.

The price of oil has almost doubled from where it was at the start of the year, pushing up fuel prices and creating the potential for inflation across a wide range of goods and services.

Economist Shamubeel Eaqub said there would be a wider inflation effect for New Zealand, beyond the increase in petrol prices that has already begun.

"The way to think about it is where it originates… essentially, the Middle East provides up to 80 percent of the crude oil to the main refineries we buy oil from in South Korea and Singapore."

Already in Singapore, the refining crack spread - the difference between refined product versus crude - had increased, meaning roughly 10c more at the pump. "That's the first wave."

"The second is around how we use oil in so many parts of the economy. It's true that for transport we're far less dependent, that was the case in the past. But there are particular industries and regions that are very influenced by it. The biggest is, of course, aviation. I feel sorry for Air New Zealand… if you look at the aviation fuel prices, they have skyrocketed because it has to be processed from a particular type of crude.

"It's all the transport sectors.