Petrol prices may hit €1.25 in a month, warns expert

MOUNTING tensions over US foreign policy could push petrol prices up to €1.25 per litre before the end of May.

As fears of US attacks on Iran and Venezuela simmered below the surface yesterday, Brent crude hit $74.16 in early trading in London, raising fears that oil and petrol will continue to spiral, warned Paul J Harris, Bank of Ireland Global Markets head of energy and emissions.

This move to new record highs in London was triggered by fears that Iran would cease its oil exports in protest at the ongoing row over its right to develop a nuclear capability.

Nerves were frayed further by data in the US showing gasoline (petrol) stocks had fallen again for the third month in a row.

In the run up to the major driving season, in the world’s largest economy, this news prompted supply concerns as US citizens take to the roads for the summer holiday period.

Adding to those fears yesterday was the fact that the fall in stocks was bigger than expected, and are now 5% below levels this time last year.

Add to that Iranian and Nigerian unrest, and the broader geopolitical global situation and the price of oil per barrel could hit $82.30 in the near term, said Mr Harris.

The geopolitical dimension involving the US and Iran took a new twist yesterday as Venezuela President Hugo Chavez threatened to destroy his country’s oil wells in the event of a US attack on his country.

His warning came as fear mounted in the region that the US could add the South American state to its potential hit list, said Mr Harris.

“The likelihood of further gains in oil looks strong - technicals point to a swift advance to at least $82.30 in the near term, which could push pump prices up to around €1.20 - €1.25 before the end of May,” he said.

Irish business is also suffering form the impact of dearer fuel.

ISME, the small and medium business group, expressed deep concern at the rising level of oil prices and its impact on Irish firms.

Chief executive, Mark Fielding said many businesses will be forced to close, particularly manufacturing, if the stand off between the US and Iran goes on much longer.

He said small business has been hit with exorbitant increases in energy costs in the last number of years.

Electricity has risen 51%, gas 46% and petrol by 43% since 2002.

“Further increases would be catastrophic, leading to company closures and job losses,” Mr Fielding warned.