Oil price nears $100 a barrel: Drivers face higher prices at the pumps

Drivers face ‘a hard time at the pumps’ as global oil prices head towards $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, driving up the cost of fuel across the motoring and aviation sectors.

Petrol prices in the UK have increased by around 10p since the start of August to an average of 155.5p a litre, its highest level since mid-December, the RAC said.

The motoring group said petrol could hit 160p a litre if it reaches $100 a barrel. It also warned diesel was set to rise to over 170p a litre from the current level of 159p.

Simon Williams said petrol prices on the forecourts were ‘too high due to retailers taking bigger margins than normal’.

Fuel price misery: Brent crude rose above $95 a barrel yesterday for the first time in ten months, driving up the cost of fuel across the motoring and aviation sectors

He added: ‘If they were playing fair with drivers, they would be reducing their prices rather than putting them up.’ 

Jet fuel, meanwhile, jumped by 5.7 per cent last week to an average price of over $135 a barrel, according to the International Air Transport Association (IATA), meaning holidaymakers face potential fare increases as airlines look to offset rising costs.

The surge came as Russia and Saudi Arabia, two of the world’s biggest oil producers, continued to cut back oil production in a bid to keep crude prices elevated. 

Earlier this month, officials in Riyadh and Moscow extended plans to reduce oil output and exports by around 1m barrels per day until the end of the year.

Saudi energy minister Prince Abdulaziz bin Salman insisted this week that the cuts were not about ‘jacking up prices’.

But analysts are predicting that prices will continue to rise as demand accelerates, particularly from China. 

The International Energy Agency warned last week that the decision to reduce production meant global stockpiles would be at ‘uncomfortably low levels’ into 2024.

The energy price surge presents a fresh headache for the Bank of England as it struggles to tackle inflation and raises the prospect that interest rates could be increased by more than expected.

Data due to be published today is expected to show UK inflation at 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 elevated cost of energy will be concerning for central banks as this can add to the inflationary pressures at a time when they are aiming to end the [interest rate] tightening cycle,’ said Richard Flax, chief investment officer at wealth manager Moneyfarm.

This post first appeared on Dailymail.co.uk