Petrol and Diesel Pricing
Since the Russian invasion of Ukraine on 24th February, there has been significant upward price pressure on petrol and diesel in the UK. This shows no sign of abating, and in addition to price rises, there is a genuine concern that shortages may follow.
In October 2021, we reported that the crude oil index, Brent, was trading around $83.50 per barrel. This is currently sitting around $109, after dropping back from just below $130, an increase of 30.5%. The US index, WTI, which traditionally trades slightly below the European brent benchmark, has also increased steeply and is trading around $105 per barrel.
We are witnessing the highest oil prices since 2008. Russia is the third-largest producer of oil globally, producing 10.7 million barrels a day. Sanctions on Russian oil could lead to prices going even higher as this would put pressure on producers in other countries such as the US, Saudi Arabia, and Venezuela.
There have been calls from the US for other nations to increase output to help stabilise fuel prices.
UK Retail Pricing
In October, unleaded petrol retailed around £1.36 and diesel at £1.40. These prices peaked at the pumps towards the end of November, with unleaded and diesel reaching £1.45 and £1.50 respectively.
However, since the 24th of February, prices have risen sharply and unleaded is averaging around the £1.61 mark and diesel breaking the unsavoury price of £1.70 per litre.
Since the start of the year, prices have increased by 16-23 pence a litre or 11-15% and 18-23% since the start of October 2021.
The UK imports around 8% of its required crude oil from Russia and isn’t as reliant on Russian energy as much of Europe. However, as oil is an internationally traded commodity, global supply issues will impact prices and continue the pressure to increase prices at the forecourts.
Rising prices can also increase domestic demand, as we saw in October 2021, which led to fuel shortages at the pumps. This was driven by an increase in customer demand and wasn’t a result of supply issues in the UK.
The UK has six refineries across the country and generally exports petrol and imports diesel to meet demand.
Prices are very volatile currently. This can lead to high price changes within a week or even a day. How and when retailers purchase their fuel can impact the price at the pump more significantly now than is normal.
Forecourts that would traditionally be the cheapest in your area may no longer be the best option. We will likely continue to see a broader range, or spread, of prices at the forecourts. Use the free myAutomate app to check prices before buying your fuel to ensure that you are purchasing at the location that best meets your needs.