THE UNREST in Iran has prompted major fears about an unprecedented rise in the cost of crude oil – the highest fuel prices for nearly three years.
The price of a barrel of Brent crude reached $68.13 (£50.40) at 6.23am this morning, up 0.4 percent, after hitting a May-2015 high of $68.19 shortly before.
Beyond a fleeting spike in May 2015, these were the highest crude price levels since December 2014, when the oil price downturn began.
While the protests in Iran have not yet had a major impact on the country’s oil production, continued instability and unrest could threaten the industry.
The industry is only likely to be affected if the protests on the streets spread to the oilfields, which is by no means an inevitability.
Geopolitical uncertainty in Iran, OPEC’s third largest producer, is also helping to support the price as citizens are again protesting the government.
The rising oil prices are also, in part, down to the ongoing cold snap which has gripped the US.
Short term demand for oil, particularly heating oil, across the US is also behind the rising prices.
President Trump’s hatred of the Iran nuclear deal could also have an impact on the cost of oil if he refuses to renew the waivers on the sanctions that were introduced under the agreement later this month.
Meanwhile, in the UK, the RAC has warned the “the good times of lower cost fuel appear to be over” as prices reached their highest level for three years.
Fuel prices are set to rise more over the course of 2018 and come just weeks after a spike in the cost of a barrel over Christmas when it was announced the chemicals giant Ineos had to close the North Sea pipeline due to a widening crack.
RAC fuel spokesman Simon Williams said: “Sadly, December was the month oil reached its highest point for over two and a half years – something which motorists are now feeling the effect of at the pumps.
“On a brighter note, the shutdown of the North Sea Forties pipeline did not cause the price of oil to increase as many expected. It had been feared this would lead to petrol and diesel going up in the run-up to Christmas, but luckily for drivers global oil production was not negatively affected as a result.
“It’s hard to see pump prices getting much cheaper in the early part of 2018. Unfortunately, the good times of lower cost fuel appear to be over and it’s probably now far more likely that we will see them going up as OPEC’s oil production cuts are starting to have the desired effect of reducing the global oil glut and pushing the barrel price higher.”
Fuel prices at the four big supermarkets, where consumers often get cheaper deals, also went up by more than half a pence a litre in December with petrol rising from 117.26p to 117.84p and diesel from 119.69p