Global financial market turmoil overnight has come with a silver lining for motorists as oil prices have slumped to their lowest level this year. 

Cheaper petrol at the pump should follow in coming days after Brent Crude Oil fell 5% to US73.74 - a price not seen since mid-December 2023. 

Prices had already drifted off in the past few days and a broad downward trend since the start of July has seen Brent Crude fall 15% from US$87. 

Kiwi Local petrol price monitoring website Gaspy shows the average pump price nationally has fallen about 5% in the past month, suggesting further savings are due. 

Several factors are putting downward pressure on current oil prices. 

Fears about the outlook on demand for the global economy are weighing heavily. China’s economy is struggling with a property downturn and consumer confidence crisis. That is dampening the demand for fuel. 

Meanwhile, fears about a slowdown in the United States and possible recession persist. 

US stocks fell sharply overnight, as weak data on the state of the manufacturing sector renewed investor concerns. 

The S&P500 fell 2% and the Nasdaq fell 3% as AI computer chip maker was sold off (falling 9.5%). 

The S&P 500 and the Nasdaq 100 saw their worst starts to September since 2015 and 2002, Bloomberg reported. 

The negative sentiment took commodity prices along for the ride. 

Geopolitcal pressure 

Supply issues have also been an issue as political turmoil has restricted oil exports from Libya. 

Reuters reported that Libyan oil exports at major ports were halted on Monday and production curtailed across the country, continuing a standoff between rival political factions over control of the central bank and oil revenue. 

But last night Libya’s legislative bodies agreed to appoint a new central bank governor within 30 days after UN-sponsored talks, Reuters said. 

Speculation about a deal was a trigger for last night’s sell-off, an analyst said. 

More supply is also set to return to the market with members of Opec+ scheduled to boost output by 180,000 barrels a day in October. 

The other variable in the price equation for motorists is the value of the Kiwi dollar, as oil trading is done in US dollars. 

The Kiwi has slipped slightly against the greenback in the past few days. Down from US62.5c at the start of the month, to trade at US61.85 today. 

That may slightly undercut gains for consumers but not enough to stop retail prices from falling further. 

Liam Dann is Business Editor-at-Large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.