Bakers and millers expecting to see a continued drop in energy costs may be disappointed, NABIM director general Alex Waugh has warned. Tensions with Iran, over the detention of 15 British navy personnel in the Gulf, have pushed up oil prices, which have been rising to their highest levels this year.

Waugh told British Baker: "If you had been anticipating the prices of energy to come down, it may not happen."

Tehran, the largest city in Iran, is the world’s fourth largest oil exporter. It has warned that, if attacked, it will halt oil exports. Iran ships roughly 2.5 million barrels per day to world markets.

According to a report in the Financial Times on 26 March 2007, the benchmark US crude future price gained 66 cents to $62.94, a rise of 13.5% over that week.

Tensions between Britain and Iran have escalated, as they dispute the location of the seven British sailors and eight marines when they were seized by Revolutionary Guards in the northern Gulf on 23 March. Tehran said the 15 may be charged with crossing into Iranian waters, while Britain insists that they were abducted in waters belonging to Iraq, with the permission of the Iraqi government. Britain said that official visits to Iran will cease and business will be suspended until the dispute is resolved.

Aggravating matters, Iranian students threw rocks and firecrackers at the British Embassy in Tehran last weekend. However, as British Baker went to press, Iran was advocating a diplomatic solution to the dispute, a move welcomed by Britain.