Tightening of Iranian sanctions could lead to jump in fuel price - economist
A leading economist has warned of a monthly fuel price increase of between 40 and 60 cents a litre in May and June.
Oil prices jumped on Monday following the news that US President Donald Trump would implement sanctions on countries that buy Iranian oil.
The Trump administration issued waivers to countries such as China, India, and Turkey last year to prevent oil prices rising in a tight oil market but will not renew them come May 2.
"He basically pledged that he intends that Iran will ultimately not be able to export any of its oil. Now Saudi Arabia and the United Arab Emirate have intervened to suggest that they will make up for some of the shortfall, but this clearly has not been seen to be sufficient to placate the markets and the price of oil has risen by about 5% since Trump's announcement," says Econometrix chief economist Azar Jammine.
"When you bear in mind that the basic price of fuel accounts for nearly 50% of the petrol price then you realise that the petrol price is set to rise by three to four per cent on account of these developments.”
LISTEN BELOW:
Last year, Trump withdrew the U.S from an accord negotiated by his predecessor, Barack Obama, under which Iran drastically reduced its nuclear program in return for promises of sanctions relief.
The announcement, made on Monday, is considered Trump's latest aggressive step to counter Iran.
The sanctions are due to kick in on May 2.