Rising oil price may affect winter fuel costs

This week, the price of US crude oil on global markets hit $80.18 per barrel – an all-time high. Consequently, Britain might be subject to a winter of rocketing petrol and energy costs

Analysts are giving many reasons for the increase in price, namely political and military concerns in major oil producing countries such as Iran and Nigeria strengthening the high oil price all year. This has now been joined by concerns over Mexico (the world’s fifth-largest producer) where left wing militias have been blowing up pipelines.

Furthermore, the US government said its oil stocks had declined by 7.01m barrels – their lowest level for 8 months. Analysts had predicted a drop of 2.4m barrels.

In addition, Opec disappointed this week by broadcasting that it is to increase production by just 500,000 barrels per day from November. Analysts had predicted that Opec would add 1 million barrels to its 30 million barrel daily output.

However, the US economy may provide some relief in the short-term, the housing crisis could result in slower consumer spending.
It is forecasted by the International Energy Agency that world oil demand will increase steadily in the final quarter of 2007 and in 2008.

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