Gasoline prices could continue to rise as the price of a barrel of oil approaches $100
- The price of a barrel of oil is approaching $100 – its highest level since the beginning of 2022
- According to RAC, increasing demand from China is one reason for higher prices
- Production cuts in Saudi Arabia and Russia also contributed
Motorists are being warned of possible rising petrol and diesel prices as the price of a barrel of oil approaches $100.
The RAC said motorists are “facing a tough time at the pumps” as rising demand from China and production cuts in Saudi Arabia and Russia trigger a rise in oil prices.
Brent crude, the oil price benchmark, closed at $94 a barrel on Monday, its highest price since mid-November 2022. Today, the price rose another $1.50 to $95.50.
It last reached $100 at the beginning of 2022 – in January 2020 it was only $28.
The RAC said motorists are “facing a tough time at the pumps” as rising demand from China and production cuts by Saudi Arabia and Russia cause oil prices to rise
Earlier this month, data showed petrol prices rose almost 7p a liter in August, marking the fifth-biggest monthly rise in 23 years.
Diesel also rose by 8p per litre, the sixth biggest jump, according to RAC Fuel Watch.
The average price of unleaded petrol was 152.25p at the end of August – a rise of 6.68p from 145.57p at the start of the month, equivalent to a tank of almost £4. Meanwhile, the price of diesel rose from 146.36p to 154.37p.
Rising fuel prices are also a headache for Bank of England policymakers, with another interest rate decision due on Thursday.
That’s because UK inflation is expected to have risen in August for the first time in six months, marking an unwelcome reversal from the recent slowdown in the cost of living crisis – largely thanks to fuel costs.
Economists expect official figures to show consumer price index inflation rising to 7.1 percent in August, from 6.8 percent in July.
Bank of England Governor Andrew Bailey admitted earlier this month that fuel prices fell in August last year but had risen this August, which could lead to a “surge” in recent inflation figures.
Prices at the pumps will undoubtedly rise as the cost of a barrel of oil approaches $100, with the RAC estimating the UK average to be around 160 pence per litre
The RAC’s Simon Williams says diesel prices will rise to over 170p a liter in the coming weeks
RAC’s Simon Williams said: “The price of diesel will rise from its current average price of 159p a liter to over 170p.”
“But with gasoline the situation is different. RAC Fuel Watch data shows that prices at the pump are actually too high because retailers are making higher margins than normal.”
Oil prices have risen nearly $12 to $86.86 a barrel since the start of July as the OPEC+ production group – often referred to by experts as a “cartel” – reduced supply.
This in turn has caused wholesale fuel prices – the price retailers pay – to rise, which has been passed on to drivers on the forecourt.
Williams added: “If they were fair with drivers they would lower their prices instead of raising them.”
“However, if the price of oil reached $100, the average price of petrol would actually only be expected to rise by a further 2p.”
“But if retailers continue to strive to make more money per liter with higher margins, this figure could be closer to 160p.”