Oil puts UK industry over barrel

BRITISH industry will be hit by cost rises of up to £1.5bn unless the price of crude oil stops spiralling. Last night US crude surged to a new peak of $47.35 a barrel before easing to $47.27. North Sea oil touched $43.40 and closed at $43.04.

Steel, glass and cement plants are expecting price rises. Jeremy Nicholson of the Energy Intensive Users Group says industry faces an 'alarming' £400m to £500m on its gas bills and £700m to £1bn on electricity.

Airlines are vulnerable. BMI has slapped on a fuel surcharge - up to £6 from £2.50. Air France has increased its surcharge until oil falls back below $35.

All airlines face steeply rising fuel bills. Zafar Khan at broker SG says fuel represents 15% of airlines' total expenses, but 30% of their cash costs.

Chemical giant ICI will be hard hit. It could not give a figure, but brokers reckon that its oil-related costs were £600m last year, so a 25% rise could cost £150m.

The oil price surge could help BAE Systems. Under its huge Saudi defence contract, 400,000 barrels a day of Saudi oil are set aside to pay for the deal.