Further increases in petrol and domestic oil prices could be on the way after Iranian opposition to increased oil production, storms hindering exports from Norway and reports of widespread strike action in Nigeria propelled the cost of oil to a fresh nine-year high yesterday.
The rise in oil prices, now at their highest level since the Gulf War, combined with continuing weakness in the value of the euro against the dollar will also further increase inflationary pressures within the euro zone economies.
That is particularly bad news for the Irish economy which is already at the top of the EU inflation league. The cost of oil imports is one of the primary factors determining inflation figures.
The price of Brent North Sea oil for delivery in April rose to $29.56 a barrel yesterday, before slipping back to $29.41 in late-afternoon trading. This was 49 cents higher than the closing price on Friday.
Irish consumers have already seen sharp rises in oil and petrol prices in recent months. The latter is in the region of 60p a gallon higher than in January 1999 and is likely to rise further if yesterday's crude prices are sustained.
Iran, Algeria and Libya, in a joint statement issued by the Iranian oil ministry, said they opposed oil production increases and would meet before an OPEC meeting in Vienna on March 27th to draft its future strategy.
Other members of the Organisation of Petroleum Exporting Countries (OPEC) have proposed higher output as a way of bringing prices down from current highs.
OPEC agreed last year to cut output by 1.7 million barrels a day as part of a worldwide reduction package of 2.1 million barrels a day that was designed to revive oil prices from the $10 level.