When could Iran deal bring petrol prices down?

News of a deal between Iran and the United States is likely to be good news for New Zealand petrol prices and interest rates, provided it sticks.

The United States and Iran agreed to a peace deal and an "immediate and permanent" end to military operations on all fronts including Lebanon, signalling the apparent end to more than three months of war in Middle East.

The details of the deal are not yet clear.

Westpac chief economist Kelly Eckhold said there was still an element of "wait and see".

"We have to actually see what transpires with the deal. This is a memorandum of understanding to have negotiations to end a war. There's obviously quite a bit of water to go under the bridge before we find out, for example, if oil flows out of the region are going to normalise, exactly how those flows are going to operate, given that Iran is continuing to say that they expect to control shipping and charge fees.

"There's also the issue of the Iranians being able to receive the sanctioned funds they say they will be receiving but the US authorities suggest not. We haven't even started talking about whatever Israel might do."

But he said it was an encouraging sign, particularly for things like fuel prices.

"I looked at it this morning before the open and Brent crude futures were at about US$87. That looked like a fuel price decrease was on the cards there. Like 91 might go down to $2.80ish or something like that over the next couple of weeks and prices have fallen a bit further still then.

"I think if prices stick and nothing comes up in the next week or so to disturb what's happened today then we should be seeing prices down into that zone in a couple of weeks."

Gaspy data shows the average nationwide is $3.15 for 91.

He said it could also help keep interest rates lower.

"The Reserve Bank is obviously quite focused on the risk of persistent inflation and these lower fuel prices and other prices probably are going to reduce inflation forecasts as we go through the next few months."

Terry Collins, AA's fuel price specialist, said what would matter would be how insurers and shipping companies felt about sending tankers through the Strait of Hormuz.

"What they'll be looking for is stability. You've got just over 500 tankers caught up in there… it'll be their risk appetite for putting them back in. You've got the likes of Iraq who've shuttered some of their production and that takes weeks to get back on, they don't want to start putting on production if they think there's a chance they've got to shut it down again… I think we're going to get a little bit better prices through this and next week.

"Will it be a collapsing price because oil's got to 83? No, I still expect we'll be paying US$80s out to the rest of the year where we used to pay US$60s but things will settle down and be less extreme if we get some form of stability."

Infometrics chief executive Brad Olsen was sceptical about the deal.

"This deal's been announced more times than I've had birthdays… I think we're waiting to see ships move through the Strait of Hormuz and until that happens none of this is anything more than talk on social media.

"It's progress. It seems like more concrete progress than before but let's be very clear, we've had these announcements a number of times before and it's going to be very easy for that risk to remain even if things are in a better position for a couple of months because everyone knows that you can close the Strait of Hormuz pretty quickly… but equally oil markets seemingly have jumped for joy on this."

Mike Jones, chief economist at BNZ, said it meant it was possible to be a bit more confident about economic activity finding its feet again in the second half of the year.

"Naturally there will be some nervousness as to whether the deal can be sustained. If it is, the most likely initial impact is a pickup in confidence that may help support business investment and even consumer spending, at the margin. Key will be the extent to which tanker traffic through the Strait can quickly resume so we'll all be watching that closely.

"There are still reasons to be cautious. It's likely to take some time for the oil market and supply chains to normalise, uncertainty is likely to remain elevated, and recoveries in both the housing and labour markets still look more like a story for next year than this. There's been a positive reception in markets though, which bodes well for the recent pull-back in fuel prices continuing."

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