Move by Iran to close key trading route for oil could send petrol and diesel prices soaring here
UCC energy expert Dr Paul Deane said even a temporary closure of the vital trade route would send pump prices up.
'Iran has the capability to close the Strait of Hormuz through military action,' he said. 'If this were to happen, even temporarily, it would have a major impact on global oil markets, causing prices to rise both in Ireland and around the world.'
Brent crude oil prices rose in the wake of the US bombing of nuclear facilities in Iran, and was trading at around $77 (€67) yesterday, having hit €81 over the weekend.
Motorists here have already seen the cost of diesel and petrol rise at the pumps over the past few weeks, after a few months of falling prices.
Home-heating oil prices have shot up in recent days, with the cost of 1,000 litres of the fuel now approaching €1,000, according to comparison site Oilprices.ie.
Dr Deane said a key factor in where fuel prices would go was what would happen to the Strait of Hormuz and whether the United States would become further involved in the conflict, he wrote on the RTÉ website.
The Strait of Hormuz, located in southern Iran, is a narrow corridor of water about 160km long.
It serves as the main transit route from the Gulf for around 25pc of the world's oil supply, including exports from Saudi Arabia, the UAE, Kuwait, Qatar, Iraq and Iran. It is considered the world's most important oil gateway.
Dr Deane said other important oil transit routes can be circumvented, but there was no meaningful alternative to the Strait of Hormuz for large-scale oil shipments.
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He said even a limited escalation in the conflict would 'cause a sharp spike in prices'.
But it is unlikely to persist for a long period because the broader global oil landscape is relatively robust.
Supply of crude oil is outstripping demand globally, with the move to electric vehicles a factor.
Meanwhile, the fuel industry here has defended the surge in prices at the pumps in recent days even though prices were slow to fall earlier in the year when crude prices fell sharply. Kevin McPartlan, of Fuels for Ireland, which represents the major petrol retailers, denied his members were 'ripping off the public' by quickly increasing prices, and failing to drop them when crude had fallen earlier this year.
He said profit margins were thin on the sale of petrol and diesel, and what he described as dynamic pricing meant wholesale prices were reflected quickly in what would be charged by retailers.
Prices charged by forecourt operators tracked the wholesale price when the ship containing the refined petrol and diesel leaves port, with most fuel coming to Ireland from Wales.
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