It’s possible fuel prices could take years to return to normal - even if peace returns to the Middle East, Fuels for Ireland has warned.
Earlier this week, US naval destroyers clashed with Iranian forces in the Strait of Hormuz, for which both sides blamed each other.
On Newstalk Breakfast, Fuels for Ireland CEO Kevin McPartlan said the Strait needs to open “fully and freely” before the matters return to normal.
“First thing to say is it takes about 50 days for fuel to get from the Strait of Hormuz to Europe,” he explained.
“So if it's refined products, then it's on the market in Ireland 52, 53 days.
“If it's crude oil that's been refined in Europe, then we have another three weeks to wait for that before it hits. That's the first point.”
A large crude oil product tanker ship in the Strait Of Hormuz. Picture by: Alamy. com. Mr McPartlan continued that US and Israeli airstrikes on Iran have destroyed a significant amount of global refining capacity - potentially as much as 5%.
Such facilities cannot be repaired or replaced in a matter of months and some experts estimate it could take five years.
“They take a long time [to repair], they have to be done to a very, very high standard,” he said.
“There are a limited number of professionals in the world who are qualified to do that type of work.
“If you think about trying to rebuild an oil refinery, that is a really technical, complex technical issue.
“So, it takes a very long time.
Fuel gouging allegations
When the conflict began, petrol and diesel prices surged and politicians were quick to allege that price gouging was taking place.
Retailers vigorously denied this was the case and prices simply reflected their own increased costs.
Now, Mr McPartlan insisted they have been vindicated.
“The CCPC has published its report, it said that there was no price gouging,” he said.
“There was no systematic anti-competitive behaviour that people were passing on the cost - wholesale prices went up.
“The first attack on Iran happened on Saturday morning, the 28th of February; the wholesale prices were up within an hour of that first attack.
“That's the nature of this business; the traders put the prices up, they put a risk premium in.”
Main image: A man filling up his car with fuel. Picture by: Alamy.com.
