Oil prices have soared due to the conflict in the Middle East and Brits are being warned that they could be hit at the pump as the cost of petrol could also spike
Brits are being warned to top up your tanks now as petrol prices could soar in the coming days due to the conflict in the Middle East.
Iran has launched a missile attack today on a US military base in Qatar, retaliating for the American bombing of its nuclear sites. And oil prices had already soared to their highest point since January following the US attack over the weekend. The threat of US involvement in the conflict between Israel and Iran led the latter to warn of severe consequences and after the missile strikes Iran’s parliament voted on Sunday to close the Strait of Hormuz – a crucial maritime route as around a fifth of the world ’s oil supply passes through it.
For the go-ahead to be given, Iran’s Supreme National Security Council would still need to approve the decision but even just the possibility of the closure led to oil prices to surge. And this has a knock on effect for Brits at the pump.
Now a latest post by Trump on Truth Social is claiming a “ceasefire” in the war between Israel and Iran has been agreed, but it is unclear at this stage how that will pan out.
Looking at the impact on oil of conflict in the Middle East, Jorge Leon, head of geopolitical analysis at energy intelligence firm Rystad and ex-Opec official, commented: “An oil price jump is expected. In an extreme scenario where Iran responds with direct strikes or targets regional oil infrastructure, oil prices will surge sharply.”
While Susannah Streeter, head of money and markets at Hargreaves Lansdown, agreed that a continued Middle East conflict is likely to lead to price hikes.
“Prices at the pumps are set to track higher in response,” she said. “Although they don’t mirror crude prices, due to other factors to consider, such as refining capacity and demand for other oil uses, petrol prices do tend to follow a similar curve upwards.
“Fresh financial pain in terms of rising prices at the pumps could still be to come, if Iran moves to limit the flow of tankers through the key Strait of Hormuz off Iran.”
She added: “If the Strait is closed there are fears it will lead to an oil price shock, and another big inflation problem, given how fuel costs are included in the basket of goods which are tracked.”
Meanwhile, RAC head of policy Simon Williams has also said that the price of fuel could go up further. “The average price of a litre of petrol has increased by 1.5p to 133.5p in the last week, while diesel has gone up by 2p to 140p,” he said.
“Although the cost of a barrel of oil jumped by $5 to $74 straight after Israel’s 13 June attack on Iran, so far it hasn’t climbed much higher. It’s now trading around $77 – $12 a barrel, more expensive than it has been for the last three months, which is not yet enough to cause a major hike at the pumps.
“As retailer margins have been high for some time, the oil price rise has squeezed these to fairer levels for drivers. If, however, retailers are set on maintaining margins of around 12p a litre, we may well see the average price of fuel go up further.
“It’s also important to note that the oil price is a long way off the $137.72 seen in the early days of the Ukraine war in spring 2022 which led to average prices reaching record highs in the summer of 191.5p for petrol and 199p for diesel.”