British motorists are bracing themselves for fuel prices to start climbing again after an influential group of oil-producing countries yesterday agreed to cut exports.
Members of Opec+ - which includes Saudi Arabia and Russia - said they would slash production by two million barrels per day.
The group said it wanted to stabilise prices, which have fallen in recent months as the world economy slows.
Expectations that these producers were planning to pump less had already pushed oil prices higher this week.
Brent crude futures were around $85 a barrel last Friday, but were above the $93 mark earlier today.
According to the RAC, the average price of diesel in the UK nearly touched £2 a litre in the summer, though it is currently around £1.80, while petrol hit £1.91 a litre in the summer but is now about £1.62.
Higher oil prices
A spokesman for the motoring group told the BBC the Opec+ reduction would "inevitably" lead to higher oil prices, forcing up the wholesale cost of fuel.
"The question is when, and to what extent, retailers choose to pass these increased costs on at their forecourts," added spokesman Simon Williams.
The cut announced by Opec+ marks the biggest reduction by the group since the height of the pandemic in 2020.
It comes despite pleas from the US and others to pump more, after oil prices spiked this spring.
In a statement, the White House said US President Joe Biden was "disappointed by the short-sighted decision".
The US pledged to continue to release oil from national stockpiles "as appropriate" and look at other ways to try to rein in prices at the pump, which are a key issue for American voters in mid-term elections in November.
Price cap
The move is also likely to disrupt US-led efforts to set a price cap for oil from Russia, a plan the US had suggested as a way to limit money flowing into the country and being put toward use in the war in the Ukraine.
Opec+ members defended their decision as a response to significant "uncertainty" about future demand for oil, amid fears that the global economy is headed to a recession.
"The decision is technical, not political," United Arab Emirates Energy Minister Suhail al-Mazroui told reporters as Opec+ members gathered in Vienna to discuss the plans.
Higher oil prices were a major driver of the run-up in consumer prices that hit countries around the world earlier this year, pushing inflation rates to levels not seen in decades and raising political tensions.
The more recent drop in the cost of crude had provided some relief to consumers, even as prices of many other staples, including food, continue to rise.
FTSE 100
The UK's top share index, the FTSE 100, was up 10 points at 7,063 shortly after opening this morning, following yesterday's 33-point loss.
Brent crude futures were 0.09% higher at $93.30 a barrel.
Companies reporting today
- Trading update: Imperial Brands