As Norway’s winter tyre season coasts to a close, the fuel price looks to be speeding towards a new record.

Oil analyst Stig Otto Mjelde believes oil prices are more likely to rise than fall, meaning motorists may soon be paying 16 kroner per litre (approximately 11 dollars per US gallon).

Unrest surrounding Iran

He informs Bergens Tidende what drives today’s high prices “is primarily connected with the unrest surrounding Iran, where western countries oppose Iran’s nuclear programme.”

“In turn, Iran has threatened to close the Hormuz Strait if further and more stringent sanctions are introduced. This is an extraordinary situation, which spreads fear in the oil market, and has had a major impact on oil prices. This is one of the main factors that also results in increased fuel prices,” Mr Mjelde adds, even though world oil supplies are adequate and there is stability in supply and demand.

Can we live with these prices?

“We can, but shouldn’t, because this will probably have a major effect on the inflation risk in Europe and the United States. In the short term, we are at a point of intersection regarding which price we can manage, but the confrontation in Iran keeps the market guessing.”

We know little about the future

Concluding several factors make it difficult to predict when prices will be reversed, he says no amount of forecasting and estimating will help “because we know very little about the future".

"The EU has announced a full oil embargo against Iran from June, thus excluding supplies from a major producer on the world market.”

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