A sudden increase in oil prices poses a threat to relief for many financially strained drivers. Brent crude surged above $100 following the breakdown of Middle East peace talks and Donald Trump’s pledge to block the Strait of Hormuz.
The US action, intended to put pressure on Tehran, jeopardizes a fragile ceasefire and prolongs the disruption in Middle East energy exports. There are concerns that oil prices could rise further, especially if Iran retaliates by targeting Gulf ports.
The recent 8% rise in oil prices to $102 per barrel contrasts sharply with the previous drop to below $94 after the ceasefire announcement. Hopes for stabilizing and reducing fuel prices were dashed as retailers failed to pass on wholesale price savings.
The AA, a motoring group, initially anticipated a 4p per litre decrease in petrol prices based on the wholesale cost reduction. However, the actual saving is now estimated at 2p per litre, with diesel drivers seeing a potential cut from 20p to 10p per litre.
Luke Bosdet, the AA’s fuel spokesman, acknowledged the fluctuating situation and the impact of conflicts on oil and wholesale prices. Despite the current rise, he predicts that petrol prices will stabilize, offering relief to drivers who can locate cheaper fuel stations through Fuel Finder price tracking.
RAC head of policy Simon Williams noted the record consecutive rise in pump prices but hinted at a possible reversal with Brent crude below $100. However, the volatile situation, especially concerning the Strait of Hormuz, could impact any potential reduction in fuel prices.
Experts highlighted the quick transmission of wholesale price changes to retail prices but cautioned that relief for drivers might be delayed. Public concern over rising petrol prices underscores the significance of pump prices as an immediate indicator.
Jorge Montepeque from Onyx Capital Group warned of Brent crude hitting $150 if Trump proceeds with the blockade. Meanwhile, North Sea oil prices surged to $147 per barrel, the highest since the 2008 financial crisis, driven by Middle East developments.
Amid fears of disrupted shipments to China and the Far East, global stock markets dipped, with the FTSE 100 down 44 points. Neil Shearing, group chief economist at Capital Economics, highlighted the potential risks of the US blockade in the ongoing conflict with Iran.
