Gasoline prices could rise further as the cost of a barrel of oil approaches $100
- The cost of a barrel of oil is approaching $100, the highest since the beginning of 2022
- RAC says growing demand from China is one reason for rising prices
- Production cuts from Saudi Arabia and Russia also contribute
Motorists are being warned about the potential for rising gasoline and diesel prices as the cost of a barrel of oil approaches $100.
The RAC said drivers will “have a tough time at the pumps” as rising demand from China and production cuts from Saudi Arabia and Russia cause oil prices to rise.
Brent crude, the oil benchmark price, closed at $94 per barrel on Monday, its highest price since mid-November 2022. Today, it is up another $1.50 to $95.50.
It last hit $100 in early 2022; In January 2020 it reached $28.
The RAC said drivers are “having a tough time at the pumps” as rising demand from China and production cuts by Saudi Arabia and Russia are causing oil prices to rise.
Earlier this month, data showed petrol prices accelerated by almost 7p per liter in August, marking the fifth biggest monthly rise in 23 years.
Diesel also rose 8p per litre, the sixth biggest jump, according to RAC Fuel Watch.
The average unleaded petrol price ended August at 152.25p, up 6.68p from 145.57p at the start of the month, adding almost £4 to the tank. Meanwhile, diesel soared 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.
This is because UK inflation is expected to have accelerated in August for the first time in six months, in an unwanted reversal of the recent slowdown in the cost of living crisis, largely thanks to the cost of refueling .
Official figures are expected to show a rise in Consumer Price Index inflation to 7.1 percent in August, up from 6.8 percent in July, economists believe.
Bank of England Governor Andrew Bailey acknowledged earlier this month that fuel prices fell in August last year but rose this August, which could cause a “pick-up” in the latest inflation figures.
Petrol prices will undoubtedly rise as a result of the cost of a barrel of oil approaching $100, with the RAC estimating the UK average will rise to around 160p per litre.
RAC’s Simon Williams says diesel prices will exceed 170p a liter in the coming weeks
The RAC’s Simon Williams said: ‘The price of diesel will rise from its current average of 159p per liter to more than 170p.
“But the situation with petrol is different: data from RAC Fuel Watch shows that prices at service stations are actually too high because retailers are making higher margins than normal.”
Oil prices have risen almost $12 since early July to $86.86 a barrel as production group OPEC+ – often labeled by experts as a “cartel” – reduced supply.
This, in turn, has led to an increase in the wholesale cost of fuel (the price retailers pay), which has been passed on to drivers at service stations.
Williams added: “If they played fair with the drivers, they would reduce their prices instead of raising them.”
‘However, if oil were to hit $100, it should really only increase the average price of petrol by another 2p.
“But if retailers remain determined to make more money per liter with higher margins, then this could be closer to 160p.”