Oil soars again on EU-Russia deal, oil prices will continue to rise
While the overnight deal, which bans oil arriving by sea but not by pipeline, has been hailed as a political breakthrough, it further limits supply.
This will lead to more pressure at the gas pump and more inflationary pressure on already seriously squeezed households.
The cost of filling a family car topped £100 for the first time this weekend, hitting 182.6palitre.
Oil investors are reaping stock price gains and city traders are being attacked for making a bad situation worse.
Brent crude hit $123 a barrel today – it was around $121 yesterday. Shares of BP rose 7p to 441p, Shell 46p to 2,420p – its shares have gained 75% in the past year.
Howard Cox, founder of FairFuelUK Campain, told The Standard: “Unfortunately prices at the pump are influenced by speculators in the city. Any volatility in the global market is manna from heaven, for those opportunists eager to make even more money with the highest taxed drivers in the world. With UK crude oil imports from Russia at around 8% and diesel at 20%, prices at the pump are certain to soar to record highs, driven by uncertainty, not business sense rational or keen sense of the management of oil companies. »
Inflation should continue. The Bank of England expects it to peak at 10%, a forecast that looks under pressure.
Central banks around the world are raising interest rates at the fastest pace in 20 years to control rising prices – there have been 60 key rate hikes in the past three months alone.
While the aim is to control inflation, critics say bankers are behind the times and warn that higher borrowing costs could simply hurt economic growth.
Duncan Goodwin of Premier Miton Investors said: “Along with fuel, food price inflation can have a big impact on the disposable income of an average consumer. We expect food prices to remain high over the next 6 months. The supply side response to higher prices is likely to take time and with the US crop looking set to be weaker this year, global supply and demand balances appear to remain under pressure.
What effect Russia’s ban might have on fuel prices is still unclear, but certainly seems inflationary. Russia currently supplies 27% of the oil imported from the EU and 40% of its gas. The EU pays Russia around €400bn (£350bn) a year in return.