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Iran war fear to set oil market on fire: US energy experts|
Fear over the closure of the Strait of Hormuz was the biggest reason why gasoline prices in the US hit an all-time January high in the first month of 2012.
Thu Feb 23, 2012 6:6PM GMT
It's a market that's caught fire. And it doesn't look like there's any circuit breakers to stop it."
Ben Brockwell, analyst at the Oil Price Information Service
US energy experts say the escalation of tensions between the United States and Iran will prompt a rise in the price of gasoline in the US, stating that a primary 30-cent increase per gallon will be just a beginning for further price hikes.
Gasoline prices have already increased by more than 10 percent over the last two months, following the increase in global oil prices, according to a report published on the CNN website said on Thursday.
According to the report, several factors, including supply disruptions in a number of oil producing nations, have caused the prices of the energy source to rise, leading in return to a similar increase in the prices of such oil byproducts as gasoline.
“But the biggest factor [behind the oil price upsurge] 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 report said.
"The market right now is fairly well supplied, but you've just got a significant fear factor that things could get worse," said John Kingston, the director of the oil department at Platts energy analysis institute.
The expert said the fear is that Iran's 2.2 million barrels a day in crude exports could be cut off.
Other experts maintain that a worse fear is over the possibility that the 17 million barrels a day that flow through the Strait of Hormuz and account for one-fifth of the world's total production could be disrupted in case of a war.
The AAA Energy Service Company has reported that fear over the closure of the Strait of Hormuz was the biggest reason why gasoline prices in the US hit an all-time January high in the first month of 2012.
"It's a market that's caught fire. And it doesn't look like there's any circuit breakers to stop it," said Ben Brockwell, an analyst at the Oil Price Information Service, which collects data for the AAA.
Unless the situation with Iran cools off, he added, and future prices decline, consumers will likely see the 35-cent-a-gallon difference in the form of a similarly paired price hike at the pump in a matter of weeks.
Israeli officials have recently ramped up their war rhetoric against Iran, threatening the Islamic Republic with military strikes in case the US-engineered sanctions against the country fail to force Tehran into abandoning its civilian nuclear program.
The United States, Israel and some of their allies accuse Tehran of pursuing military objectives in its nuclear program.
Iran refutes the Western allegations, and the International Atomic Energy Agency (IAEA) has never found any evidence indicating that Tehran's civilian nuclear program has been diverted towards nuclear weapons production.