Petrol reaches new high as UK, U.S. hit by Iran ban

TEHRAN,Feb.25(MNA)--Petrol prices in Britain and United States has hit new record highs; going up daily, the fact that analysts say triggering by new sanctions against Iran oil. Petrol price in UK has increased 10% year on year. That’s after Tehran blocked oil exports to the country as part of its reaction to financial sanctions from the West, rt.com reported. A liter of diesel will now cost 143.05 British pence, or $2.25, just above the previous peak of 143.04 pence a liter reached during the Libyan conflict last May. And the people at the pumps are already paying the price. MIranda Schunke from Green Flag Automobile association warns that the continued price rise will affect all other consumers as well. “It’s a disaster for motorists, and not only are they being stung month after month now by these fuel price rises, but there’s also a concern that this is going to spread to the cost of everyday items such as food, because those transportation costs to get those foods to store will be passed onto businesses and then the consumer,” she said. The British themselves say this could put people off buying petrol, as well as off driving. Britain’s imports of Iranian oil are minor. The country bought just 11 thousand barrels from Tehran last year, not even 1% of its total imports. But the global oil market was earlier threatened European vow to cut Iranian oil imports. A fall in production in South Sudan and Yemen also contributed to the global price rise. For Iran, more expensive petrol is a way to compensate for reduced volumes of oil trade, Julian Lee, Senior Energy Analyst at the Centre for Global Energy Studies, told RT. “It’s seeking to benefit from maintaining its exports but earning a higher price for each barrel that it sells,” he said. Earlier on Monday Iran said it would stop supplies of oil to Great Britain and France, basically pre-empting an embargo from the West. In late December, EU states agreed to stop buying black gold from the Islamic Republic, and blocked most banking operations with the state last week. Experts predict the ongoing tensions could add 25% to oil prices by Easter. --- Sanctions hit Americans too Tensions with Iran are adding at least 30 cents to a gallon of gasoline in the United States, and experts say gas prices have only just begun to rise. Gasoline prices have surged over 10% in the last two months, largely tracking the run up in oil prices, which have increased by a similar amount and are now at a 9-month high, CNN Money reported. Several factors have caused oil prices to rise, but the biggest factor by far, say analysts, is fear that tensions with Iran will lead to an all-out war that causes a disruption in oil supplies. The fear is that Iran's 2.2 million barrels a day in exports could be cut off. Iranian oil is already being sanctioned, but so far most is still finding its way to market. Worse, there's fear the 17 million barrels a day that flow through the Strait of Hormuz, one fifth of the world's total production, could be disrupted by an Israeli attack. That's a big reason why gasoline prices in the United States averaged $3.37 in January, the highest for any January ever, according to AAA. Unless the situation with Iran cools off and future prices decline, consumers will likely see that 35-cent-a-gallon difference in the form of a similarly paired price hike at the pump in a matter of weeks. Many economists say gasoline prices sustained above $4 a gallon could stunt the growth of the fragile worldwide economy -- a fact which diplomats shuttling to Israel must be well aware. It's thought the Israelis are considering an attack on Iran as a means to disrupt its nuclear program, which Iran says is for peaceful purposes. It is not increased demand that is driving fuel prices upward, nor is it a lack of supply. It's fear of international discord according to CNN. Iran pumps 2.2 million barrels of petroleum into the world's crude oil supply daily. Strong economic sanctions or worse, all out war in Iran, would eliminate those barrels from the daily supply. War in Iran would also create danger for tankers transiting the Strait of Hormuz from the Persian Gulf into the Gulf of Oman before moving into the open waters of the Arabian Sea. That would endanger the flow from oil producing countries such as Kuwait, Saudi Arabia, and the United Arab Emirates and reduce the world supply of crude by 17 million barrels daily. The loss of that oil would be a devastating blow to the global economy. Rising gas prices come at a precarious time for the United States. The economy is showing signs of recovery. High gas prices will take the steam out of that recovery and fuel inflation without economic growth.