Fuel price increases for motorists are “inevitable” following U.S. and Israeli strikes on Iran and Tehran’s retaliation across the Middle East, the president of the UK’s Automobile Association has warned.
The United States and Israel launched overnight strikes against Iranian targets, prompting retaliatory attacks by Tehran that reportedly hit sites in the United Arab Emirates, Qatar, Bahrain, Jordan and Iraq.
The escalation has raised concerns over oil shipments through the Strait of Hormuz, a critical maritime route for global crude supplies. Several oil companies have reportedly suspended shipments through the strait amid heightened security risks.
Edmund King, president of the AA, said the renewed turmoil would likely disrupt global oil distribution.
“The turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes,” King said.
Energy markets reacted nervously to the conflict, with analysts warning that any sustained disruption in the Gulf region could drive up crude prices and increase fuel costs for consumers worldwide.
The Strait of Hormuz handles roughly a fifth of the world’s oil supply, making it one of the most strategically important shipping lanes in global energy trade.
AMP chief economist Shane Oliver told Australia’s ABC that oil prices could spike sharply, possibly rising above $100 a barrel from around $67 for West Texas Intermediate on Friday, given the disruption to supplies, including via the Strait of Hormuz.
“This is particularly so given the broad nature of the US and Israeli attack — including talk of regime change — and Iran’s broad-based retaliation so far,” Oliver said.
“The key issue is how long it lasts.”
He warned that a prolonged conflict would cause greater economic damage. (Newswire)
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