World conditions could see petrol price rise

Motorists could soon face spiralling petrol prices after a damaging strike in Venezuela and tension over Iraq pushed the cost of oil close to two-year highs today.

City experts said oil companies and supermarket chains may have to increase charges considerably at the pump in the spring after a dramatic fall in oil supplies from Venezuela.

And military action in Iraq could fuel a further hike if the impact of any allied attack disrupts output from neighbouring states Saudi Arabia and Kuwait.

Orrin Middleton, energy analyst at Barclays Capital, said: “If for any reason Kuwait or Saudi Arabia are affected, then I think we will see oil go up to 40 dollars a barrel.”

Oil prices have soared this year on tension in the Middle East and climbed by 1.50 dollars a week since the start of the month after a general strike by workers in Venezuela.

The strike action, centred on opposition to the country’s left-wing president Hugo Chavez, has cut output from the world’s fifth-largest oil producer by nearly three million barrels a day.

US oil stocks have been significantly hit and analysts fear that if the strike, now in its 26th day, continues into the New Year, the shortfall could reach dangerously low levels.

Prices for Brent crude for February delivery rose 74 cents today to 30.35 US dollars, its highest level for two years when stripping out September 11. The rise matched a similar surge overnight in the US.

Mr Middleton said: “If the strike continues and stocks don’t build, we could see a massive spike in gasoline prices."

A quick regime change in Iraq would probably have little impact on the oil price but a prolonged campaign destabilising the region could have wider implications, he added.

Oil giant Shell said it had no plans to raise prices at the petrol pump despite the volatile market but was ready to follow any increase by its main rivals.