Cost of fuel to rise as oil hits $70 a barrel

UK motorists are warned to expect a price hike at the pumps as the cost of a barrel of oil hits $70 for the first time in three years.

Data from RAC Fuel Watch shows that the cost of a barrel was last over $70 (£51.97) on December 3 2014, when it hit $70.22.

Now the firm’s insurance arm is warning there is likely to be a knock-on effect at fuel station forecourts.

The average price of unleaded petrolin the UK currently stands at 121.27p a litre and diesel is 123.97p – both having risen from a 2017 low of 114.33p and 115.02p respectively.

The RAC, however, expects this to rise further.

Fuel spokesman Simon Williams said: “Oil hitting $70 a barrel is potentially very bad for motorists who are already having to get used to paying 7p a litre more for petrol and 9p more for diesel than they did last July.

“If oil stays at this level, pump price hikes will be almost inevitable. With households across the country still feeling the cost of Christmas this is not the start to 2018 anyone would have wanted. It could also negatively affect business and further fuel inflation.”

Motorists have already seen a rise in costs as petrol has gone up nearly 5p a litre since the start of November (diesel has risen 3p in the same period).

The RAC is fearful that $70 a barrel could become the new norm for 2018, something that would be bad news for motorists without a significant strengthening of the pound that would keep wholesale prices in check due to fuel being traded in dollars.

Williams added: “Looking at the global oil picture it seems as if the glut of oil stocks is disappearing due to the production cuts imposed by OPEC along with non-member Russia as the United States’ crude oil inventories have fallen for eight weeks in a row. The US is now producing far more from fracking but this isn’t filling the gap from the OPEC cuts.

“If, however, the US’s fracking production increases substantially there is a hope that the price of oil may fall back and settle at the mid-$60 a barrel mark (approximately £44.54). This would, of course, be far better news for UK motorists.”