Oil Price Nears $100 a Barrel: Drivers Face Higher Prices at the Pump
Motorists face “a difficult time at the pumps” as global oil prices approach $100 a barrel for the first time this year, the RAC has warned.
Brent crude, the international oil benchmark, rose above $95 a barrel yesterday for the first time in ten months, raising the cost of fuel in the automotive and aviation sectors.
Petrol prices in the UK have risen by around 10 pence since the beginning of August to an average of 155.5 pence, their highest level since mid-December, the RAC said.
The car group said petrol could hit 160 pence a liter if it hits $100 a barrel. It also warned that diesel would rise to more than 170 pence per liter from the current level of 159 pence.
Simon Williams said petrol prices at service stations were “too high as retailers made higher margins than normal”.
Fuel price misery: Brent crude rose above $95 a barrel yesterday for the first time in ten months, driving up fuel costs in the automotive and aviation sectors.
He added: “If they played fair with drivers, they would reduce their prices instead of raising them.”
Meanwhile, jet fuel rose 5.7 percent last week to an average price of more than $135 a barrel, according to the International Air Transport Association (IATA), meaning tourists face potential price increases. rates as airlines look to offset rising costs.
The increase came as Russia and Saudi Arabia, two of the world’s largest oil producers, continued to cut oil production in a bid to keep crude prices elevated.
Earlier this month, officials in Riyadh and Moscow expanded their plans to reduce oil production and exports by around 1 million barrels per day until the end of the year.
Saudi Energy Minister Prince Abdulaziz bin Salman insisted this week that the cuts were not aimed at “increasing prices.”
But analysts predict prices will continue to rise as demand, particularly from China, accelerates.
The International Energy Agency warned last week that the decision to cut production meant global reserves would be at “uncomfortably low levels” until 2024.
Rising energy prices present a new headache for the Bank of England as it struggles to tackle inflation and raise the possibility that interest rates could rise more than expected.
Data to be published today is expected to show UK inflation was close to or above 7 per cent last month, up from 6.8 per cent in July, as a result of fluctuating fuel costs.
“The high cost of energy will be worrying for central banks, as it may increase inflationary pressures at a time when they intend to end the [interest rate] adjustment cycle,” said Richard Flax, chief investment officer at wealth manager Moneyfarm.
