Petrol prices could rise further as the cost of a barrel of oil nears $100
- Cost of a barrel of oil approaches $100 – the highest its been since early 2022
- RAC says increasing demand from China is one reason for higher prices
- Productions cuts by Saudi Arabia and Russia also contributing factor
Motorists are being warned over the potential of rising petrol and diesel prices as the cost of a barrel of oil approaches $100.
The RAC said drivers are ‘in for a hard time at the pumps’ as increasing demand from China and production cuts by Saudi Arabia and Russia spark a spike in oil prices.
Brent crude, the oil price benchmark, ended Monday at $94 per barrel, its highest price since mid-November 2022. Today, it is up another $1.50 to $95.50.
The last time it reached $100 was in early 2022 – it was as low as $28 in January 2020.
The RAC said drivers are ‘in for a hard time at the pumps’ as increasing demand from China and production cuts by Saudi Arabia and Russia are sparking a hike in oil prices
Earlier this month, data showed that petrol prices accelerated nearly 7p-a-litre in August, marking the fifth biggest monthly rise in 23 years.
Diesel was also up 8p-a-litre, the sixth biggest leap, according to RAC Fuel Watch.
The average price of unleaded ended August at 152.25p – up 6.68p from 145.57p from the start of the month, adding nearly £4 to a tank. Meanwhile, diesel shot up from 146.36p to 154.37p.
Rising fuel prices are also giving Bank of England policymakers a headache with another interest rate decision due on Thursday.
That’s because UK inflation is expected to have accelerated in August for the first time in six months in an unwelcome reversal of the recent slowdown in the cost-of-living crisis.
Official figures are predicted to show an increase in Consumer Prices Index inflation to 7.1 per cent in August, up from 6.8 per cent in July, economists believe.
The sharp rise in petrol prices is expected to fuel inflation last month.
Bank of England Governor Andrew Bailey acknowledged earlier this month that fuel prices went down in August last year but up this August, which could lead to a ‘tick-up’ in the latest inflation figures.
Simon Williams, from RAC, said: ‘Diesel is set to jump in price from its current average of 159p a litre to over 170p.
‘But the situation with petrol is different with RAC Fuel Watch data showing that prices on the forecourt are actually too high due to retailers taking bigger margins than normal.’
Oil prices have risen nearly $12 since the start of July to $86.86 a barrel, due to producer group OPEC+ – often labelled by experts as a ‘cartel’ – reducing supply.
This in turn has led to the wholesale cost of fuel – the price retailers pay – going up, which has been passed on to drivers on the forecourt.
Williams added: ‘If they were playing fair with drivers, they would be reducing their prices rather than putting them up.
‘However, if oil were to hit $100, it should really only take the average petrol price up by another 2p.
‘But if retailers remain intent on making more money per litre with increased margins then this could be closer to 160p.’