As reported last week, the important oil shipping route running between the Gulf of Oman and the Persian Gulf in the Middle East, the Hormuz Strait, is at risk of closure which could result in a global increase of oil prices owing to the potential disruption in the export of up to 15.5 million barrels of crude oil per day. Iran's Revolutionary Guards Corp are reported to be planning naval exercises in the Hormuz Strait later this month with the aim being to close the 35 mile wide chokepoint in the shortest time possible if the situation should require it, lending weight to the recent reports that a hostile closure of the Strait could happen if EU & US sanctions regarding Iran's nuclear programme are not relaxed. These sanctions state that Iran must stop uranium enrichment - the process which can be used to make both energy and nuclear warheads. Tehran states it is only seeking energy from reactors, and so refuses to cease enrichment. This sensitive subject will be covered as any developments occur.

In the short-term though, supply is plentiful and expected to easily cope with demand as the mild weather continues; this should lead to a falling market as we begin 2012, with winter 2011-2012 prices being on a par with summer 2012 prices and dropping to a 20-month low. Even further ahead and April 2014 prices are well within the expected range of the current markets. Although subject to change of course, the predicted stability is nothing but good news for UK power prices.

As the Eurozone crisis rumbles on behind the scenes, and Germany seem to be coping with meeting demand during their first winter with reduced nuclear capacity without relying too heavily on imports; any effects of disruption to the Hormuz Strait would be offset in part but should not be taken lightly and could potentially have large impacts on the price of oil, and by association the economy as a whole.

Get in touch with our expert team of Energy Consultants and Utility Consultants today using the links on this page to discuss any queries you have with Business Energy Procurement and Energy Management - in these volatile times, any advice can be good advice, and we're always happy to help.