Oil to remain high on Iran, Nigeria concerns

Rashomi Silva

COLOMBO: Economic analyst warn that ever increasing oil prices would create a lasting impact on habits and behaviours of petroleum product consumers worldwide.

World crude oil prices crossed the USD 70 mark again and the Gasoline prices jumped upto 3 dollar margin in US early this week for the first time after Hurricane Katrina.

Despite the reduction in the demand for oil products, as predicted by OPEC, prices may remain high for a while, predict the analysts, citing the supply disruption in Nigeria and the standoff between the West and Iran, OPEC number two producer as main reasons. Sri Lanka imports most of its crude oil from Iran.

"Slowing consumption growth and swelling inventories of crude oil in the US would help pull down oil prices but disruptions in Nigeria and the Iran nuclear crisis stand in the way," a reputed oil industry website quoted.

In Sri Lanka, the recent increase in petroleum prices is likely to affect the cost of transport, and will cause a ripple effect in other areas of the local economy. Among the most affected will be industries that depend on petroleum and natural gases.

Ceylon Petroleum Corporation Jaliya Medagama said the fuel subsidy would amount to Rs 25 billion this year if crude oil prices in the international market remain at present levels.

CPC chief called upon the consumers to turn to more fuel saving options to beat the price hike.