Gas prices are expected to spike in Jamaica following Saturday’s drone attack on the world’s largest oil refinery in Saudi Arabia. The incident has disrupted the world’s energy infrastructure and will have a major impact on supply and demand.
CVM TV was able to interview local motorists and they’re negatively reacting to the news, saying that they are in no position to accommodate additional costs.
The incident in Saudi Arabia is said to have global consequences, with the cut in production the industry anticipates a global spike in oil prices.
Oil prices ended nearly 15% higher on Monday, with the Brent benchmark seeing its biggest jump in about 30 years.
The rise came after two attacks on Saudi Arabian facilities on Saturday knocked out about 5% of global supply.
Brent crude initially surged 20% at the start of trading, but eased back to end at $69 a barrel, up 14.6%. US oil prices finished up 14.7%, the biggest jump since 2008.
Drivers will not immediately see an increase at the pump, according to international energy policy expert Prof Nick Butler.
“The direct impact of the attacks could be short-lived,” he said.
“The market has adjusted without blinking over the last two years to the loss for political reasons of over two millions barrels a day of production from Venezuela and Iran.”
In the UK, 40% of the price of a litre of petrol is made up of oil, fuel production and profit. The rest is tax.
“There are currently savings in the wholesale price that have only just started to be passed on to drivers by retailers,” says Simon Williams from the RAC.
Following the incident, President of the United States, Donald Trump moved to authorize the release of oil from the U.S. Strategic Petroleum Reserve (SPR)
However, with Saudi Arabia possessing the world’s second-largest oil reserves the impact for Jamaica is inevitable.
Opposition Senator and Economist Dr. Andre Haughton says consumers can expect Jamaica’s gas prices to spike and that this will affect the robustness of our domestic economy. According to him, the Jamaican Government now needs to examine its economic activities and diversify the islands’ sources of energy.
An increase in fuel prices will also signify the latest threat to the economy already pressured by the US-CHINA trade war.