Motorists face a jump in petrol prices after Brent crude surpassed $92 a barrel for the first time this year, triggered by supply cuts from Saudi Arabia and Russia.
Oil prices rose by 1.4% on Tuesday to hit a 10-month high, with Brent crude having leapt by more than a quarter since late June.
Caroline Bain, chief commodities economist at Capital Economics, told the Telegraph it will take four weeks for the latest rise to flow into higher petrol prices.
Pump prices for unleaded petrol (including VAT) have already jumped by 9.2p since the middle of June to hit 152.49p per litre at the start of September, according to the RAC.
Analysts warned that oil prices could soon hit $100 per barrel, driven by the widening gap between supply and demand expected at the end of this year.
Ms Bain told the newapaper: “I could definitely see prices rise to the high $90s to $100.”Global oil demand will outstrip supply by 3.3 million barrels per day over the next three months, according to new data published by the Saudi-led Organisation for Petroleum Exporting Countries (Opec).
This will potentially be the largest gap between demand and supply in more than 10 years.
The rise in global oil prices coincides with a period of turmoil for oil and gas production in the UK’s North Sea.
Several UK operators have announced major cuts in investment linked to the UK Government’s windfall tax.
Harbour Energy, the UK’s largest oil and gas producer, said the scale of its tax bill had forced it to abandon new North Sea projects and invest overseas.
Similarly, Ithaca Energy, another major operator, has cancelled three drilling programmes scheduled for this year and warned that a lack of investment will mean a decline in production from 2024.
FTSE 100
The UK's top share index, the FTSE 100, was down 13-points at 7,514 shortly after opening this morning, following yesterday's 30-point rise.
Brent crude futures were up 0.28% at $92.32 a barrel.
Companies reporting today
- Inditex (Half year results)
- Redrow (Full year results)
- Tullow Oil (Trading statement)