Fuel prices throughout the UK are on the rise again, the PRA has warned, as global political and economic pressures take their toll on the cost of crude oil.
The civil unrest in Syria and Egypt, the reduction by one third in Libya’s oil exports and the demand for oil slowly returning to some Asian markets have all had an impact on crude oil prices, with the cost of Brent pushed through the critical $110/barrel level last week -equating to a 10% increase since the end of June, according to the PRA’s chairman Brian Madderson.
“Fuel prices are expected to increase throughout the UK as external factors have a great impact on the price of crude oil,” he confirmed.
The PRA’s predictions come on the same day as Goldman Sachs Group forecast that Brent crude prices may rise to $115 a barrel in the “very near term”.
Madderson said: “UK petrol prices have not yet seen the full impact of this crude oil increase due to the rapid and slightly unexpected revaluation of pound sterling from $1.48 to $1.56. Therefore it was concerning to read recent comments from the City that the “pound is overblown” and will soon come hurtling down towards the $1.45 level.
“We calculate at current wholesale prices that this will add a further 5ppl at the pump before the end of September and hit businesses and households in the pocket at a time when pundits are forecasting a continued increase in retail sales to drive growth in the economy. Should the Middle East tensions escalate further and crude oil prices react accordingly, the Bank of England’s new inflation targets could be significantly challenged.
“The sooner the EU Competition investigation into allegations of oil price fixing is completed, the more certain we can be that our retail fuel prices are only being influenced by macro-economic and political factors and not anti-competitive actions of the oil companies.”