Brent crude reached a two and a half year high yesterday raising concerns that rising costs, such as business gas prices will slow down manufacturing.
Brent crude was over $120 a barrel yesterday partly as a result of traders’ concern over the conflict in Libya and a growing US economy which could add pressure to oil supplies.
Oil markets are also on edge at the moment with elections due in oil rich Nigeria, violence in Yemen and strikes in the West African country of Gabon.
Manufacturers in the UK have said that rising oil and other costs has affected growth in the first three months of this year. In a survey by The British Chambers of Commerce, most businesses forecast that turnover and profit growth would slow down.
The Chambers of Commerce questioned 6,000 firms and said the results of the survey “highlight the fragility of recovery”. It said confidence had fallen significantly to levels seen in the middle of the recession and added that the outlook for the manufacturing industry was “worrying”.
Despite manufacturing struggling in recent months the construction sector grew in March. However, unemployment is expected to carry on rising.
High oil prices are helping to push up business gas prices and the price of goods in general as fuel prices rocket. Manufacturers have to increase the price of their goods as they take into account rising transport costs.
While the Iranian President, Mahmood Ahmadinejad said that oil prices were not real and will end up as high as $150 a barrel, the chief executive of the Kuwait Petroleum Company said he thought a “fair price” for oil is between $90 and $100 a barrel. However, Mr Farouk al-Zanki said Kuwait hadn’t been asked to increase production.