Iran conflict could spark fuel price rises but it will not hit Irish supplies
Homes, businesses and motorists could face higher fuel prices as a consequence of the
conflict in Iran
, but not a threat to supplies, Irish oil suppliers believe.
Recent Israeli and US attacks on Iran's nuclear facilities have sparked fears for oil and gas supplies, and raised the risk that the Islamic Republic will shut or block the Strait of Hormuz, a key shipping lane for the Middle East's producers.
Any blockade of the strait would be a 'worst-case scenario', according to Kevin McPartland, chief executive of industry body Fuels for Ireland, but he added that this would not hit supplies to the country.
However, the conflict continues to drive prices up, he said. Both petrol and diesel are up 10 cent a litre, while home heating oil has risen 7-8 cent since Israel first launched its attacks on Iran.
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'And that's not factoring in America's intervention over the weekend,' Mr McPartland said.
Oil prices regained some ground early on Tuesday after Israel warned of new missile fire from Iran and pledged to retaliate, threatening a ceasefire announced just hours earlier by US President
Donald Trump
.
Brent crude, the international oil benchmark, fell as much as 5.6 per cent to $67.50 on Tuesday morning after Mr Trump said that the regional rivals had agreed to a ceasefire, allaying fears that the conflict would restrict global oil supply.
But prices bounced after Israel said it would 'respond forcefully' to what it called a violation of the ceasefire, leaving Brent down just 2.4 per cent at $69.76 a barrel in London.
There are time lags between global market increases and what motorists and consumers pay for fuel.
Mr McPartland's organisation represents suppliers including Circle K, Maxol and Applegreen, along with Whitegate Oil Refinery.
He explained that these businesses, which meet around half of Irish energy needs, can draw on multiple sources for their products, so do not depend solely on a single region.
'So there is no need for anyone to be panic buying,' he said.
But the conflict in Iran threatens to continue pushing up globally with the result that oil will cost more irrespective of where it is produced.
The Strait of Hormuz is one of the world's busiest shipping channels, with around 20 per cent of global oil production flowing through the waterway each day. Iran controls its northern side.
Analysts at investment bank Goldman Sachs calculated that a closure of the Strait of Hormuz could drive prices to $110 a-barrel.
Mr McPartland said suppliers here would not gain from any price rises that the conflict causes.
'The people that benefit are the traders,' he said.
The Government also gains as its tax take from price increases on fuel, which is subject to 23 per cent VAT, one of the highest rates in Europe.
AA figures show that the State gets more than 50 per cent of what drivers pay for petrol and diesel.
'We have been calling on the Minister for Finance to establish an expert group to review the taxation of fuel,' Mr McPartland said.
The prospect of businesses and families paying 'more and more' for oil and gas makes this even more urgent.
Paschal Donohoe, Minister for Finance, has agreed to meet Fuels for Ireland, he added.
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