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Volatility in oil market set to push up prices at the pumps

John Wood ·
fuel pumps

Volatility in the oil market caused by the heightened tension in the Middle East could feed through to the pumps in the shape of higher prices, the RAC has warned.

RAC fuel spokesman Simon Williams said: “Increasing tension between Washington and Tehran will cause the oil price to go up as traders worry about availability of supply.

“It also comes at a time when the oil price was already on the rise due a further OPEC production cut and the cooling of the US’s 17-month long trade war with China which has led to increased demand.

“As things stand, it looks like at least 2ppl will be added to the price of both petrol and diesel in the next two weeks. If the current situation in the Middle East was to escalate however, drivers could be looking at far greater increases at UK forecourts.

“Unfortunately both petrol and diesel have also been subject to an annual EU renewable fuel obligation rise which has led to 1ppl being added from the start of January.”

Pump prices had already risen slightly in December, after four consecutive months of falls, as oil prices were already on the rise.

Over the month of December the average price of a litre of unleaded petrol rose slightly, by 0.24ppl, to 126.11ppl, according to data from RAC Fuel Watch.

The price of oil increased $3 ($2.91) a barrel over the course of the month from $63.61 to $66.52 – a rise of nearly 5%.

The supermarkets were quick to react to the rise in wholesale costs, putting up their forecourt prices just two weeks after mid-month cuts to both petrol and diesel.

Asda had led the way on 13 December by cutting 2ppl of unleaded, taking its pump price to 117.7ppl, and reducing diesel by 1ppl to 122.7ppl.

But by 29 December the supermarket had increased its petrol price by 2.5ppl to 120.26ppl and its rivals also increased their unleaded prices. Despite the mid-month cut the average price of petrol at the big four supermarkets went up 0.24ppl to 121.48ppl – this is 4.63ppl lower than the UK average (126.11ppl). The same was true of diesel: having begun the month at 125.16ppl at the supermarkets, a litre of diesel at the end of December was 126.02ppl – up 0.87ppl but still 4.59ppl below the UK average for all forecourts of 130.61ppl (up 0.75ppl on November). The rise in the average price of diesel is the first increase since September.

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    wholesale
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    Average
Weekly retail fuel prices: 24 February 2020
RegionDieselLPGSuper ULUL
East127.9462.00136.58124.72
East Midlands127.70137.72124.65
London128.12137.79125.20
North East125.92136.20122.89
North West126.8567.57135.95124.01
Northern Ireland124.76130.73121.98
Scotland126.97133.86123.39
South East128.6564.90139.38125.39
South West127.77135.04124.41
Wales126.67135.28123.28
West Midlands127.58140.14124.60
Yorkshire & Humber126.87137.50123.73

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