The ongoing events in the Middle East are likely to result in increased fuel prices, leading to pain for consumers at the gas station. Already, the average cost of petrol has risen by almost 2.5p per litre and diesel by over 3p since the weekend. Reports indicate that in some areas, prices have surged by 11p per litre, prompting drivers to rush to refuel as a precaution.
Oil prices have surged above $82 per barrel, with warnings from the AA of inevitable pump price hikes in the coming weeks. FairFuelUK predicts a potential increase of 5p to 10p per litre in the near future. Despite the recent low fuel prices, any further increases will heavily rely on the developments in the Gulf region and the duration of the conflict.
The closure of the vital Strait of Hormuz, responsible for shipping around 20% of the world’s oil and gas, has created panic in global markets by disrupting approximately 14 million barrels of daily supplies. Although there are substantial reserves available in times of crisis, a continued depletion of these reserves could lead to a significant rise in oil prices.
Households may face higher pump prices, impacting consumer confidence and household budgets. Calls have been made to Chancellor Rachel Reeves to reconsider a fuel duty rise scheduled for the autumn. Rising oil prices not only affect fuel costs but also have a ripple effect on various sectors such as food prices, transportation, and airfares.
While consumers bear the brunt of escalating fuel prices, oil companies like BP and Shell have seen their shares rise post-attacks. Economically, Russia stands to benefit as the disruption in Strait of Hormuz shipments may redirect buyers to Russian oil, potentially bolstering President Putin’s finances amidst the ongoing conflict in Ukraine.