Petrol set to rise 2p a litre

DRIVERS face paying 2p a litre more for petrol as oil prices soar amid fears over a war in Iraq. The price of oil raced past $24 a barrel on Monday night, a $4 jump in less than a fortnight. Today analysts warned that petrol price rises are now imminent, akthough the oil price did fall back 48 cents to $23.41.

One analyst said: 'There is no way the oil companies are going to take these sort of price rises on the chin. They are bound to pass this on so that means motorists will have to pay more for petrol.'

Some experts are warning that oil could reach $26 a barrel. At that level, America's economic recovery could be threatened.

Oil traders view President Bush's military focus on Iraq with increasing trepidation. 'It's very hard to see a downside to the oil price at the moment,' said Geoff Pyne, an oil market analyst for Sempra Energy Trading in London. 'If you view military action against Iraq as likely, which I do at some stage, then exports are almost certain to stop. I would regard that as very serious.'

Jordan's King Abdullah recently warned that any attack on Iraq would have catastrophic repercussions in the oil-rich Middle-East, which holds two thirds of the world's reserves.

If the 11 members of Opec decide to freeze production quotas, pressure on Russia to meet the gap will increase. However, that would mean it breaking a pact with the mostly Arab nations.