Ripple effect from Iran oil row

24 Jan 2012, 6:40 pm   -   Source: SBS
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Australian fuel prices may rise as high as $1.65 per litre under an embargo on Iranian oil, amid a real threat of conflict between Iran and the US.

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Tensions over oil exports between Iran, the United States and the European Union could have a ripple effect that may raise petrol prices to around $1.65 a litre, an analyst has said.

“If there was an embargo on Iranian oil and conflict escalated in the Middle East, then you could be looking at maybe $115 - 120 a barrel, so another $15 to 20 added to the world oil price,” said AMP Chief Economist Shane Oliver.

“The last thing economy wants is a sharp surge in the petrol price, given the pressure the economy is already under, with job layoffs and very low levels of consumer confidence,” Mr Oliver told SBS.

On the rule that each $10 dollar hike in the crude price adds 10 cents per litre at the pump -  a 15 to 20 cent rise would take petrol to around $1.65 per litre.

The European Union has decided to implement an embargo on Iranian oil, and Saudi Arabia has offered to fill the gap it leaves.

Of Iran's key southern European oil customers - crisis-ridden Greece may have the most to lose.

Greece held up an accord on the embargo, as it relies on Iran for more than a third of its imports, which are bought on very favourable terms.

There are also a real threat of conflict with the US as tensions rise over Iran's threatened closure of key oil shipping channel, the Strait of Hormuz.

The US has ships stationed in the Persian Gulf near the strait, and Iran claims one of its warships was recently filmed in its territory.

"Iran will not submit to that kind of pressure and will in fact ratchet up the tensions," Professor Shahram Akbarzadeh from Melbourne University has told SBS.

"I think Iran is careful and is ... trying not to initiate military action," Prof Akbarzadeh said.

"But .. there's a lot of pressure in the grass roots in Iran that want conflict," he added. 

"Hostility toward the West is very much at the heart and the logic of the Iranian regime, so it will be difficult to avoid conflict," he said.

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Your Comments

Ha Australia lead....

Slunt - from Brisbane, 4 months ago

Australia cant ever lead, we are a nation so insignificant to the global trade, culture, economy, in fact everything, that if we weren't to follow, australia would be known by another name..... Couple our insignificance with a country wide attitude of "as long as i have me tinnie, a beer on the weekend and a BBQ, i dont care" and you can see why we are no more than a pomeranian barking amongst a legion of wolves.... stockpile fuel, water and fuel..... actually dont.... i want it.

Great

Ryan - from Earth, 4 months ago

Just what we need more reasons to make fuel more expensive.. I'm going to set my car on fire in the middle of the freeway at peak hour in protest....

Australian puppet govt

Lex - from Canberra, 4 months ago

Its an embarrassment as an Australian to see our government blindly following the US on an unjustified economic assault on yet another nation. Without any kind of public debate - welcome to democracy western style, what a farce!

America barks we follow

Wag - from Sydney, 4 months ago

Of course the Australian government follows like the lap dogs they are ,one day they will lead by example .......fat chance ... lol

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