UK petrol prices poised to hit record 150p a litre soon, warns RAC

Analysts warn of 10% inflation and weaker growth across western economies as Ukraine crisis raises oil price to $99 a barrel

UK petrol prices are poised to hit a record 150p a litre later this week after the worsening tension in Ukraine added fresh pressure to the cost of living crisis facing households.

Crude oil prices reached more than $99 a barrel at one point on Tuesday in response to Vladimir Putin’s decision to recognise the independence of two breakaway regions in eastern Ukraine. Prices later slipped back after markets viewed the west’s initial sanctions response as weak.

But with Brent crude ending the day 1.6% higher at just under $97 a barrel, the RAC said motorists would quickly be paying 150p a litre for unleaded petrol and 154p a litre for diesel.

Analysts said the cost of crude – already at its highest level in seven years – was soon likely to push through the $100-a-barrel level.

Jeremy Nicholson, corporate affairs officer at Alfa Energy Group, said: “The deterioration of the situation in Ukraine and threat of military action by Russia is adding to the risk of disruption to European gas supplies, putting further pressure on UK/European wholesale gas and power prices. Oil prices are also being affected, with growing expectation oil could shortly reach or exceed $100 a barrel.”

Germany’s decision to withhold approval of the Nord Stream 2 gas pipeline drew a swift response from Dmitry Medvedev, Russia’s former president and now deputy chairman of its Security Council.

“Welcome to the new world where Europeans will soon have to pay €2,000 per thousand cubic metres!” he tweeted – suggesting prices were set to double.

On a rollercoaster day, stock markets in Europe took their initial cue from Asia, which suffered big falls overnight after Russia sent troops into Donetsk and Luhansk.

Share prices later recouped most of their losses in London, Frankfurt and Paris after the UK imposed sanctions on five of the smaller Russian banks and on three individuals already targeted by the US.

But the risks of further turbulence on the global markets increased when the Nato secretary-general, Jens Stoltenberg, said the alliance believed Russia was planning a bigger assault on Ukraine. Western leaders in London, Washington and Brussels warned they would scale up their response if there was an intensification of Russia’s military action.

Responding to all-party criticism, Britain said it would be scaling up its response while the EU and the US also pledged to put strong economic pressure on Moscow.

The UK’s Centre for Economic and Business Research thinktank warned the crisis in Ukraine threatened to deliver a double blow of higher inflation and weaker growth.

“Any international action will likely not only add to the current inflationary binge, possibly bringing inflation close to 10% in the main western economies, but also should slow down growth quite rapidly,” it said.

The UK annual inflation rate – as measured by the consumer prices index – currently stands at 5.5% but is forecast by the Bank of England to rise above 7% by the spring.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

In London, the FTSE 100 index in London closed marginally higher at 7,495.97. Germany’s Dax lost 0.4% while France’s CAC slipped 0.16%, and Italy’s FTSE MiB and Spain’s Ibex were flat.

Russian stock markets also staged a small comeback after earlier losses, with the dollar-denominated RTS index and the rouble-denominated Moex index on the Moscow exchange both rising 1.6% this afternoon.

Shares in Russia’s largest lender Sberbank rose 1.3% (after an earlier gain of 5%) while the second-biggest bank VTB was up 1.7%, after they escaped British sanctions.

Russ Mould, investment director at the investment firm AJ Bell, said:

“Moscow’s RTS index was down 3% before Olaf Scholz and Mr Johnson made their statements – and it ended the day 1.6% higher. Major gainers included Gazprom, Norilsk Nickel, Tatneft and Rusal.”


Larry Elliott and Julia Kollewe

The GuardianTramp

Related Content

Article image
Shell to halt buying Russian oil and gas and Unilever to stop sales in Russia
Exodus of big British companies continues as bosses forced to examine their companies’ links to Russia

Julia Kollewe and Jasper Jolly

08, Mar, 2022 @7:24 PM

Article image
Petrol profiteering? ‘I’m not robbing motorists, I’m only making 2-3p a litre’
Forecourt staff feel their customers’ despair but insist there is nothing they can do to keep prices down

Alex Lawson Energy correspondent

17, Jun, 2022 @2:03 PM

Article image
Ukraine crisis: commodities prices surge as stock markets slump
Russian invasion of Ukraine fuels near-40% rise in gas price and oil to $105 per barrel as European stock markets tumble

Phillip Inman, Rob Davies and Julia Kollewe

24, Feb, 2022 @5:27 PM

Article image
UK petrol prices are closing in on all-time high, warns RAC
Cost per litre nears the record 142.48 set in April 2012, stoked by global demand outpacing supply rather than UK fuel shortage

Rob Davies

05, Oct, 2021 @11:01 PM

Article image
Average UK price of diesel hits record of more than £1.80 a litre
Further rise likely if EU ban on Russian oil goes ahead, and petrol up 3p since start of month at 166.65p

Alex Lawson Energy correspondent

16, May, 2022 @11:49 AM

Article image
UK petrol hits fresh high of 151.67p per litre as oil and gas prices soar
Russia’s invasion of Ukraine continues to create turmoil in energy markets

Rob Davies

02, Mar, 2022 @3:23 PM

Article image
Oil price jumps as Russia hints at production cuts
Price of oil temporarily leaps 8% as Russian energy minister says February discussions with Opec members will address topic of production cuts

Terry Macalister

28, Jan, 2016 @9:06 PM

Article image
UK fuel prices could rise by 3p a litre after North Sea pipeline closure
RAC warns price of unleaded petrol could climb to 123.76p as oil price is sent soaring by string of incidents

Adam Vaughan

12, Dec, 2017 @7:48 PM

Article image
Europe could face energy rationing as ‘really tough winter’ looms, Shell boss warns
Ben van Beurden says Ukraine war fallout means big rise in bills and possible need to ration supplies

Mark Sweney and Alex Lawson

14, Jul, 2022 @12:04 PM

Article image
UK households face biggest fall in living standards since 1950s, say experts
Russian invasion of Ukraine could further hike global energy prices and cut real incomes by 3.1%, economists fear

Richard Partington Economics correspondent

26, Feb, 2022 @7:00 AM