Prime Minister Christopher Luxon says the world's at 'an inflection point in geopolitics' meaning NZ needs to 'broaden and deepen relationships'

Fuel, food and getting closer is on Prime Minister Christopher Luxon's agenda as heads to Singapore next week for the Singapore-New Zealand Leadership Forum and to meet with Singaporean Prime Minister Lawrence Wong and President Tharman Shanmugaratnam.

"We've got this great relationship, and the global context demands us to work together. And we like working with Singapore," Luxon told Interest.co.nz.

"Clearly, we're at a geostrategic inflection point, we're moving from this multilateral rule system to this multi polar power system around the world."

Luxon will also be there to witness the signing of an agreement on Trade in Essential Supplies, that ensures New Zealand and Singapore keep trading essential goods during crises and when supply chains are disrupted.

Fuel, of which NZ sources a third from Singapore refineries, is a key part of this agreement for NZ as well as pharmaceuticals and construction supplies, while food is an important part for Singapore. 

Luxon described the agreement as world leading.

"I know there'll be a lot of focus on the fuel component of it, but that's actually sorted by virtue of the agreement from October, but I'm equally excited about broadening it out..." Luxon said, giving examples of trade, defence, business and digital relationships.

"In the context of a world that's very uncertain, it gives us more permission to even be bolder, braver, practical, to do some different things."

While fuel prices remain volatile and flights continue to be cancelled in NZ, the unwelcome news landed this week that shipping giant Maersk slapped a 27% fuel fee increase on NZ from Friday, due to the surge in energy prices.

Referring to Maersk's surcharge, Luxon said; "That is why we've been saying this crisis will have a have an impact on inflation and will have an impact on growth for all the 195 countries in the world, but that is why we want to minimize that impact as much as possible here at home."

"There's no denying, yes, when you've got big input costs... first and foremost, our job is to secure supply. Secondly, it's to try and mitigate as much of the pricing impacts as we can."

'A really good conversation'

Luxon has been involved in meetings with 51 countries, to understand the United Kingdom and France-led military planning for a potential multinational mission to re-open the Strait of Hormuz.

"We all got together a couple of Friday nights ago at midnight, and we had a really good conversation. I spoke at that forum as well…. to advocate for the freedom of navigation, the opening up of that Strait. Clearly, any multilateral action would need to be post a ceasefire and just about maritime security."

Luxon said he and Wong had both advocated strongly for freedom of navigation on the call with UK PM Keir Starmer and French President Emmanuel Macron. 

It comes as Foreign Affairs Minister Winston Peters confirmed NZ had received "initial and preliminary information on a US proposal to restore and maintain safe passage through the Strait of Hormuz", after The Wall Street Journal reported a cable from US President Donald Trump's Administration had been sent to US Embassies calling on diplomats to get foreign governments to agree to sign up to the coalition.

The Green Party has described the US proposal as a "pressure campaign" that NZ needs to rule out, and Peters said NZ was not close to making any decisions about it. 

According to the cable, the US-led coalition would share information, enforce sanctions and coordinate diplomatically.

"New Zealand has participated in peacetime security and maritime security events in the past, but we, in that case with the European led-leadership proposal and the one that we've just received in the last day from the Americans, we obviously need to seek information out for both of those and understand exactly what is imagined and what is intended," Luxon said. 

"Then we would go to Cabinet and talk more about what we think we could do to support or not."

'An inflection point in geopolitics'

On what kind of coalition Luxon would want to be involved in - if any, he said it was "a reality of recognising the world's at an inflection point in geopolitics, and as a result, the way that you mitigate that as best you can as a small country is that you need to broaden and deepen relationships." 

"For us, it's about having broad relationships across the piece. So certainly Macron and Starmer... they want to hear from us… I’m advocating for the Pacific and our region, as to what is the challenges that we see with this particular conflict."

"But actually, we believe in a freedom of navigation, right? We don't want a precedent put in place where tolls are charged, because you think about the 10 other important oceans that New Zealand travels with all its exports, and what that would do to global trade would be, it would be a terrible precedent."

"So that's why we're advocating very strongly."

Luxon said he and Wong were; "very much at the forefront of those conversations with other leaders as well, because we believe in this stuff instinctively because we've got the most at risk, because we're the smallest guys, and we have values and interests, but we don't have power in our foreign affairs."

"So, that's the challenge."

'They are finding alternative feedstocks of crude'

Luxon said while the refineries in Singapore and South Korea, which NZ is heavily dependent on for its fuel, and while they in turn rely on Middle Eastern crude, "the refineries are also vertically integrated in many cases."

"What's happening is they are finding alternative feedstocks of crude. It may be coming out of the US, Canada, Peru, Chile, Oman, West Africa. And as a result, the cost of that is logistically, a longer route, or it's adding more cost, potentially to the transportation."

On his outlook, Luxon said even if a ceasefire between the US, Israel, and Iran happened, "say today, which is unlikely, but if it did, the effects of this on the supply chains will be felt for six to 12 months."

"It's a very volatile situation. And so what we have to do is keep advocating for ceasefire, de escalation resolution, keep advocating for the rules based system, and then prepare as best we can to maintain supply to New Zealand."

Luxon said both NZ and Singapore had benefitted from an international rules based system.

"We want to continue to remake the case for the multilateral system, not the power system... So that's why broadening and deepening our relationship with them is so important. We have great historical ties. We've done a lot of innovative things in the trade space together as two countries."