New conflict in the Middle East could make petrol prices more expensive for motorists in the UK, experts have warned.
Rising oil prices could see higher costs for consumers across the British economy – and the first place those rises will show is at the fuel pumps.
Will petrol prices go up?
Fuel retailers base the price of petrol and diesel on several factors, but on the front end what motorists pay is strongly influenced by wholesale crude oil prices.
On Friday, the price of oil was below $70 (£52) a barrel, but on Monday – after the US-Israeli attack on Iran – it rose to $78 (£58) a barrel.
Many economists believe it could reach $100 (£74) a barrel if the situation in the Middle East continues for much longer.
How quickly can prices rise?
Oil prices have risen nearly 9% since Sunday night – with more upside potentially on the horizon amid volatile conditions.
An increase in the price of crude oil usually takes two weeks to filter through to the fuel pumps, according to the motoring body, RAC.
Another thing that affects pump costs is the exchange rate because oil is priced in US dollars, says the RAC.
This means that a stronger British pound against the US dollar will lower UK prices.
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Which Iranian officials were killed?
How does conflict affect prices?
The Middle East is a major oil producing region in the world.
The Strait of Hormuz on Iran’s southern border It is a critical trade route that allows the movement of a fifth of the world’s oil trade – or 21 million barrels a day.
The 100-mile waterway runs from the Persian Gulf to the Gulf of Oman and the Arabian Sea and Indian Ocean.
There is a fear that if the waterway is blocked, there will be a significant increase in the price of oil.
What do experts think will happen to prices?
George Lyon, of energy intelligence firm Rystad Energy, said any blockade of the Strait of Hormuz would have a direct impact on British motorists.
He said: “We have a direct effect – it’s higher prices at the pump and higher electricity bills, but a secondary effect, which is that inflation could go up because things become more expensive.”
However, some experts believe that the movement of oil and trade will adjust to any continuing conflict.
“Shipping is well placed to adapt in the event of a crisis,” said John Stoppert of the International Chamber of Shipping, a global trade association of ship owners and operators.
He said: “While this is a big shock, we are very concerned about the reported attacks against shipping in the region, trade is flowing, the straits are not closed, so unless there is a big change in the security dynamic in the region, any impact we will see will be minimal.”
