UK Petrol Prices Set to Rise Amid Escalating Israel-Iran Conflict
Concerns about regional military tensions lead to fluctuations in oil prices, prompting fears of higher petrol costs in the UK.
UK motorists are preparing for increased petrol prices following a recent surge in oil prices attributed to the escalating conflict between Israel and Iran.
As tensions rise, Brent crude oil prices have shown volatility, climbing to approximately $75 a barrel before witnessing a decline, and US crude prices also saw similar fluctuations, reaching $73.42. The initial spike was fueled by fears of potential disruptions to oil supplies, given Iran's significant role as a global oil producer, contributing roughly 3% of the world’s oil supply.
After four days of conflict marked by Israel's attacks on over 100 Iranian targets—including nuclear and missile facilities—oil prices surged by more than 13% on Friday, marking their highest levels since January.
However, reports of Iran's willingness to engage in talks with the United States and Israel led to a decrease of 3.4% in Brent crude prices, settling around $71.70 per barrel.
In response to the ongoing crisis, Iranian officials have requested the intervention of regional powers such as Qatar, Saudi Arabia, and Oman to lobby the US government for a ceasefire with Israel.
The escalating situation has raised concerns over geopolitical stability and its implications for global oil markets.
Thomas Pugh, an economist at RSM UK, indicated that the recent increase in oil prices—approximately $10 per barrel over the past week—could lead to a rise in petrol and diesel costs of about 5 pence per liter in the UK over the coming months.
The current average price for petrol in the UK stands at 132.1 pence per liter, experiencing a slight increase after a prolonged period of declines that began in March when prices averaged 139.8 pence per liter.
The rise in wholesale petrol costs surpasses levels from earlier this year, although prices remain lower compared to the first quarter of 2023. Market analysts have noted that the robust summer gasoline demand in the US often influences petrol prices in the UK.
Despite market volatility, the stock response has been measured, with the FTSE 100 index rising by 0.4% and shares of oil companies like Shell and BP initially gaining before retracting.
Other European markets, including Germany and France, experienced modest gains of 0.7% and 0.9%, respectively.
Market analysts anticipate ongoing conflict, albeit on a limited scale, as geopolitical uncertainties loom.
Mohamed El-Erian, an economic advisor at Allianz, cautioned that the tensions could lead to slower global growth, increased inflationary pressures, and diminished policy flexibility for central banks.
James Hosie from Shore Capital mentioned that the rise in Brent crude prices to around $75 per barrel might be temporary unless the conflict directly compromises Iran's oil infrastructure significantly.
Weekend attacks by Israel targeted crucial energy installations in Iran, raising concerns about the potential impact on Iranian oil exports, which currently amount to approximately 2 million barrels per day.
Moreover, there are fears that Iran could retaliate by threatening regional energy supplies, particularly by disrupting tanker traffic through the Strait of Hormuz—a vital passageway for 20% of global oil and liquefied natural gas shipments.
Should tensions escalate to this point, it could affect oil exports from Saudi Arabia and other Middle Eastern countries, impacting major consumers like China.
Some market analysts have pointed out that while risks remain, adjustments in oil production by OPEC members and US shale producers could mitigate potential disruptions in supply resulting from Iranian export challenges.
Oil prices have generally remained below the $80.53 per barrel average observed last year prior to the outbreak of the conflict.
As tensions rise, Brent crude oil prices have shown volatility, climbing to approximately $75 a barrel before witnessing a decline, and US crude prices also saw similar fluctuations, reaching $73.42. The initial spike was fueled by fears of potential disruptions to oil supplies, given Iran's significant role as a global oil producer, contributing roughly 3% of the world’s oil supply.
After four days of conflict marked by Israel's attacks on over 100 Iranian targets—including nuclear and missile facilities—oil prices surged by more than 13% on Friday, marking their highest levels since January.
However, reports of Iran's willingness to engage in talks with the United States and Israel led to a decrease of 3.4% in Brent crude prices, settling around $71.70 per barrel.
In response to the ongoing crisis, Iranian officials have requested the intervention of regional powers such as Qatar, Saudi Arabia, and Oman to lobby the US government for a ceasefire with Israel.
The escalating situation has raised concerns over geopolitical stability and its implications for global oil markets.
Thomas Pugh, an economist at RSM UK, indicated that the recent increase in oil prices—approximately $10 per barrel over the past week—could lead to a rise in petrol and diesel costs of about 5 pence per liter in the UK over the coming months.
The current average price for petrol in the UK stands at 132.1 pence per liter, experiencing a slight increase after a prolonged period of declines that began in March when prices averaged 139.8 pence per liter.
The rise in wholesale petrol costs surpasses levels from earlier this year, although prices remain lower compared to the first quarter of 2023. Market analysts have noted that the robust summer gasoline demand in the US often influences petrol prices in the UK.
Despite market volatility, the stock response has been measured, with the FTSE 100 index rising by 0.4% and shares of oil companies like Shell and BP initially gaining before retracting.
Other European markets, including Germany and France, experienced modest gains of 0.7% and 0.9%, respectively.
Market analysts anticipate ongoing conflict, albeit on a limited scale, as geopolitical uncertainties loom.
Mohamed El-Erian, an economic advisor at Allianz, cautioned that the tensions could lead to slower global growth, increased inflationary pressures, and diminished policy flexibility for central banks.
James Hosie from Shore Capital mentioned that the rise in Brent crude prices to around $75 per barrel might be temporary unless the conflict directly compromises Iran's oil infrastructure significantly.
Weekend attacks by Israel targeted crucial energy installations in Iran, raising concerns about the potential impact on Iranian oil exports, which currently amount to approximately 2 million barrels per day.
Moreover, there are fears that Iran could retaliate by threatening regional energy supplies, particularly by disrupting tanker traffic through the Strait of Hormuz—a vital passageway for 20% of global oil and liquefied natural gas shipments.
Should tensions escalate to this point, it could affect oil exports from Saudi Arabia and other Middle Eastern countries, impacting major consumers like China.
Some market analysts have pointed out that while risks remain, adjustments in oil production by OPEC members and US shale producers could mitigate potential disruptions in supply resulting from Iranian export challenges.
Oil prices have generally remained below the $80.53 per barrel average observed last year prior to the outbreak of the conflict.
