Iraq war could make filling your car much more expensive
Iraq is in crisis, as the army struggles to deal with the advancing forces of the Islamist State in Iraq and al-Sham (ISIS) group. Militant fighters continue to march towards Baghdad from the north and west and now 70% of Anbar province is under their control. They have seized Mosul, Tal Afar, Rutba, and Qaim and are closing in on Baghdad.
The fighting has hit oil production - which could have a serious impact at the pumps.%VIRTUAL-SkimlinksPromo%
Impact on oil priceThe fighting at the moment is largely in the North, and 90% of the oil comes from the south, so the impact is not as serious as it could have been. However, there have already been issues for the industry. Fighting has shut Iraq's largest oil refinery in Baiji, and the crisis means that there is very little chance of re-starting exports from northern Iraq - which halted after the pipeline was sabotaged in March. There is also the risk that militants will choose to attack oil-producing resources in the south in order to destabilise the country - so there is a risk of sabotage to oil extraction, transport and refinery.
The oil price is not just affected by changes in supply either - it can be hit by sentiment, too. A spokesperson from the AA said: "Market volatility is always the issue. Sometimes concerns can affect the market even if supply isn't affected." He said that the shutting of the refinery sent some 'jitters' into the market.
Already we have seen the wholesale price rise 1p, which is likely to translate into about 2p per litre at the pumps. The spokesman added: "The analysts are predicting that prices may climb a bit more in the coming weeks, but it's early days, so it's hard to say how much by."
He added that the good news for British motorists is that the oil market is traded in dollars, so the fact that the pound has strengthened should provide something of a cushion to rising prices.
What can you do?There's certainly no call for panic buying, as we cannot yet tell how much of an impact the war will have on production or prices - or how long-term any impact would be. The most sensible approach, therefore, is to ensure that when you need to fill up, you buy the cheapest possible petrol in your area (without going out of your way to find it).
The best way to find it is through www.petroprices.com, which has a list of prices in each area. The difference between the highest and lowest tends to be somewhere between 1p and 2p a litre, so many people can wipe out the effect of the changes so far with some canny shopping.