The impact of the United States President Donald Trump’s decision to pull out of the Iran deal is already being felt in the United Kingdom. Over the next fortnight, warning have been issued to British motorists that they would have to shell out an additional 2 pence for every litre of fuel while filling up their vehicles.
Since the announcement of the U.S. to pull out of the Iran nuclear deal and the threat of re-imposition of economic sanctions on the country, global crude oil prices have risen to $77 a barrel from $75 a barrel. There are fears about supply side constraints because of fresh economic sanctions on Iran by the U.S. that can inhibit its capacity to export.
The international benchmark for oil prices – the Brent crude futures, is set to touch its highest weekly rise in a month. For a brief period on Thursday, the price hit $78 which is the highest since November 2014.
The factors that are contributed to the driving up of oil prices include the production curb by OPEC, the weakness in the pound and geopolitical problems, said the RAC said calling the impact of the factors to be a “toxic combination” of oil prices.
126.5p a litre could be the price for petrol within the next 15 days because eo fthe rise in global crude prices which would be the highest level that was last reached in October 2014, the motoring group said.
“Sadly, the days of petrol and diesel for under a pound a litre in early 2016 are fast becoming a distant memory,” said the RAC’s Simon Williams.
Iran proc\duces about $ per cent of the total global supplies of the world and a pledge to fill out any gap in the supply left by Iran has been made by Saudi Arabia which is the largest exporter of oil in the world.
Khalid al-Falih, the Saudi energy minister, tweeted that the Kingdom would “work closely with major Opec, non-Opec producers and with key consumers to mitigate the effects of any supply shortages”.
However, the strategy of Saudi Arabia of curbing production to shore up prices of oil does not fit well with its latest announcement about oil exports. Experts have said that it also does not auger well for the planned $2 trillion initial public offering of about 5 per cent of the state owned oil major Aramco.
The oil analysts PetroMatrix said: “We need therefore to work on the basis that the Saudi oil policy has been forced to change and that the Opec-Russia supply restriction agreement is seeing its last days.”
A discussion on the possible extension or not of the curbs on production would be held between OPEC and Russia on 22 June.
(Adapted from TheGuardian.com)