The outbreak of conflict in the Middle East is all but certain to see fuel prices for French drivers increase, experts have said.
The Strait of Hormuz between Iran and the Gulf States, responsible for around 20% of global oil tanker traffic – as well as a fifth of liquefied natural gas traffic – is currently closed to traffic following missile strikes in the area.
Several non-combattant ships were hit by missiles over the weekend after conflict broke out, leading to the International Maritime Organisation to advise all ships to avoid the passage.
Several ships, including gas tankers, remain stuck in port along the strait, including those belonging to neutral countries such as France.
The cost of a barrel of Brent oil (the reference for crude oil on the global market) opened at $80 at the start of the week, before stabilising at around $78.37 a barrel – significantly higher than the $72 it closed at on Friday (February 27).
At the start of the year, a Brent barrel cost $61.
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Several other crude oils – used for several purposes including petrol production – also saw prices rise.
There is a risk that crude oil prices may reach $100 a barrel in the coming days, levels not seen since the outbreak of the war in Ukraine in 2022.
20c per litre increase possible
The uncertainty about the future of global supply both in the short- and long-term has led to panic on the market and a quick price hike.
Increased prices are not only limited to crude oil however, as European gas prices jumped over 20% since the start of the conflict.
The knock-on effect of this on consumers is simple – rising prices in several areas, most noticeably fuel, but likely to affect everyday goods and food as transportation costs rise.
An increase in fuel price is ‘inevitable’ according to Professor of Economics at Paris Dauphine University Patrice Geoffron.
“If there were to be a total blockade, we would be in an extreme scenario with price consequences that are difficult to predict, but possibly exceeding $100 a barrel, at least temporarily,” he said to FranceInfo.
“What is more likely, in the event of a protracted conflict, is that the price will stabilise above $80 a barrel.”
Prices at that level would equate to a 7-10 cent per litre increase in fuel cost in France, which would take effect after around two weeks.
If crude oil prices reach $100 per barrel, this may even progress to a 20 cent per litre increase, said president of the Mobilians group Francis Pousse.
Historic fuel prices in France can be seen in the graph below.
Avoid rush to the pumps and check prices near you
Drivers in France rushed to the pumps over the weekend, anticipating any increase in fuel cost by filling up vehicles, with some even bringing jerrycans.
Such action is counterproductive, however, said Mr Pousse.
“It is understandable, but we must avoid storming the gas stations… when we have fuel in France and no supply problems today. We must avoid filling up as a precaution and think of those who really need to get around,” he said to France Bleu.
The sudden increase in fuel prices following the War in Ukraine was partially absorbed by the French government, via fuel rebate policies and an ‘energy shield’ to keep household bills low.
It is unlikely however that similar programs will be implemented in the event of a protracted conflict in the Middle East, notes Mr Geoffron, who said the ‘budgetary situation’ is the main prohibitive factor.
