However, a closer look at the data shows New Zealand is a clear outlier in how it meets these obligations.<\/p>\n
How NZ\u2019s fuel security has shifted offshore<\/p>\n
To remain compliant, the New Zealand Government buys \u201cticket\u201d contracts \u2013 or contractual claims on oil stored in other countries.<\/p>\n
While these count toward the country\u2019s 90-day requirement, they are effectively rights to purchase fuel that may never reach its shores during a major disruption, such as the closure of the Strait of Hormuz.<\/p>\n
In January, New Zealand\u2019s total petroleum reserves stood at exactly 90 days\u2019 supply. This meets the IEA\u2019s minimum requirement, but is the second-lowest reserve among members, ahead of only Australia\u2019s 49-day capacity.<\/p>\n
New Zealand is also the only IEA member whose public oil reserves are fully overseas.<\/p>\n
By contrast, countries such as Japan and South Korea hold around 200 days of reserves domestically, leaving them far better prepared for global supply shocks.<\/p>\n
It comes after New Zealand\u2019s heavy reliance on offshore reserves has grown sharply over the past 15 years.<\/p>\n
IEA data shows the country\u2019s domestically-held industry stocks made up more than 90% of reserves in 2010\u201311, while public offshore holdings accounted for less than 10%.<\/p>\n
By 2026, that balance had flipped. Industry stocks had fallen to 42%, while government-owned reserves held abroad had risen to 58%.<\/p>\n
As companies cut physical inventories to reduce costs, the Government filled the gap with ticket contracts to maintain compliance with the IEA\u2019s 90-day requirement.<\/p>\n
This shift effectively means New Zealand\u2019s domestic resilience has been hollowed out. In January, for instance, the country held just 38 days of onshore petroleum stocks \u2013 far below the average of IEA members and of other Asia-Pacific nations.<\/p>\n
The Government\u2019s recent move<\/a> to procure 90 million litres of diesel at Marsden Point will add roughly nine days of supply.<\/p>\n While a positive step, it remains small compared to the much larger domestic buffers maintained elsewhere.<\/p>\n The economic cost of fuel uncertainty<\/p>\n Because oil is a major driver of inflation, this all matters greatly to the average New Zealand household.<\/p>\n Last month, local diesel prices surged to over $3.80 a litre<\/a>, almost double what they were before the Iran conflict. Because diesel powers farming and transport \u2013 both cornerstones of the New Zealand economy \u2013 these costs ripple through the entire supply chain.<\/p>\n When geopolitical risks rise, businesses increase \u201cprecautionary demand\u201d, hoarding fuel inventory to avoid shortfalls. This reduces available supply and pushes prices even higher.<\/p>\n Research suggests the most effective way to reduce exposure to energy price volatility is through financial hedging or by holding physical fuel reserves. Holding reserves helps buffer against sudden supply shocks and reduce the risk of stockouts.<\/p>\n New Zealand, however, has only a thin physical fuel buffer. So what might be done?<\/p>\n Increasing onshore petroleum stocks can strengthen short-term energy resilience. But bigger oil tanks are not a lasting solution: true energy independence requires reducing New Zealand\u2019s underlying oil consumption.<\/p>\n In this sense, there is much room for improvement. IMF data shows New Zealand has a relatively low level of trade in low-carbon technologies, at just 1.3% of GDP in 2024 \u2013 well below the IEA average of 4.76%.<\/p>\n To bolster its energy security in the meantime, New Zealand could look at increasing strategic onshore reserves, while shifting away from ticket contracts toward physical stockpiles to support critical sectors such as farming and freight.<\/p>\n At the same time, it could make a greater push toward electrification<\/a> and the uptake of alternative energy sources, particularly by powering transport with renewable electricity.<\/p>\n Ultimately, this requires an orderly transition away from oil altogether, with a clear national focus on reducing dependence over time.<\/p>\n Right now, New Zealand\u2019s strategy is a gamble on global stability. To protect the economy from future global oil supply shocks, it must bring its petroleum reserves home \u2013 then work hard to make them obsolete.<\/p>\n Sign up to Herald Premium Editor\u2019s Picks<\/a>, delivered straight to your inbox every Friday. Editor-in-Chief Murray Kirkness picks the week\u2019s best features, interviews and investigations. Sign up for Herald Premium here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"However, a closer look at the data shows New Zealand is a clear outlier in how it meets…\n","protected":false},"author":2,"featured_media":413595,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[23968,534,682,11231,19271,537,3468,1667,46227,17309,15292,57920,2678,1437,658,302,809,32033,11781,111,43,139,425,69,4732,193,1523,4517,12879,6302,187865,20705,19862,223,212625,59039,1530,80],"class_list":["post-413594","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-zealand","tag-23968","tag-amid","tag-being","tag-boost","tag-chain","tag-crisis","tag-deal","tag-energy","tag-essential","tag-exposed","tag-flowing","tag-freshly","tag-fuel","tag-global","tag-goods","tag-its","tag-keep","tag-moved","tag-net","tag-new-zealand","tag-news","tag-newzealand","tag-now","tag-nz","tag-offshore","tag-other","tag-over","tag-past","tag-resilience","tag-safety","tag-singapores","tag-struck","tag-supply","tag-the","tag-touted","tag-worsening","tag-years","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/413594","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=413594"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/413594\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/413595"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=413594"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=413594"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=413594"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}