War 'would drive petrol up to $6 a gallon'

Petrol could surge to around $.144 (€1.37) a litre in the event of a war with Iraq, according to British accountancy firm Tenon.

It says a war could push the oil price up as high as $60 (€57) a barrel in a "realistic worst case scenario".

That would have a knock-on effect on prices at the pump, pushing petrol up from its current price of around $1.18 (€1.13) a litre to as much as $1.44 (€1.37), or more than $6.40 (€6) a gallon, the report says.

Maurice Fitzpatrick, head of economics at the firm, says: "Our report shows that an increase in oil prices as a result of a war with Iraq could result in substantial increases to the price of petrol at the pump."

Mr Fitzpatrick says the current petrol price is based on oil at around $26 (€24) a barrel - which was the fairly consistent price until a month ago when a strike in Venezuela started to severely affect oil exports from the country.

He believes an increase in the oil price will also lead to a "cash bonanza" to the British Treasury - because revenues from North Sea oil tax would increase dramatically.

Oil is up 60 cents at 29.30 dollars (€28.10) in London, as the Venezuela strike continues. The stand-off has had a significant impact on US oil reserves - the American Petroleum Institute reported that crude inventories and imports fell sharply last week.