Written question asked by Lord Kennedy of Southwark (Labour), in the House of Lords. It was answered by Lord Marland (Conservative) on Thursday, 15 March 2012.

Energy: Oil

Question: To ask Her Majesty's Government what is their assessment of the reasons for the increase in the price of a barrel of Brent crude oil from the end of 2011 to the current price and the implications for the United Kingdom economy.

Answer: A number of factors affected oil prices at the end of 2011. These include uncertainty over the future levels of Iranian exports, Iran threats to close the Strait of Hormuz, an increased ““risk premium”” due to heightened potential for disruption in the Middle East, continuing strong demand growth from Asia, and slow growth in non-OPEC producing countries. The impact on the UK economy of higher oil prices is complex, working through a number of different channels. Oil is a factor in production for a wide range of goods and services; and higher oil prices will tend to have a negative impact on output, inflation and unemployment.

Secondary information