UK petrol prices rise after Opec decides to cut oil production

https://www.theguardian.com/money/2022/oct/11/uk-petrol-prices-rise-opec-oil-energy-costs-inflation

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Fuel price increase is blow to drivers amid soaring domestic energy costs and other inflation

Petrol prices are climbing again for the first time in three months, after the controversial decision by the Opec oil cartel and its allies to cut oil production, putting more pressure on drivers during the cost of living crisis.

Forecourt prices for petrol and diesel in the UK had been falling since early July and throughout the summer, according to motoring organisation the AA, but the trend reversed after the Opec meeting in early October.

Nearly half a penny was added to average petrol prices over the weekend, while diesel prices have also begun to rise again.

Average pump prices for petrol stood at 162.32p a litre prior to the weekend, according to the AA’s figures, but on Monday had reached 162.78p a litre.

Meanwhile, the average price of diesel has seen a greater rise, taking it from 180.45p before the weekend, to 182.17p on Monday.

“At the start of July, pump prices had set records of 191.53p a litre for petrol and 199.07p for diesel. And, although diesel saw a temporary rebound as August turned into September, drivers have enjoyed steady falls in road fuel costs throughout the summer,” said Luke Bosdet, the AA’s fuel price spokesperson.

The Opec+ group of oil-producing nations agreed to a cut in output of 2m barrels a day at their meeting on 5 October, equivalent to 2% of global supply, despite significant pressure from the US.

The Biden administration had tried to persuade oil-producing nations not to cut supplies, fearful it would push up fuel prices and add to already soaring inflation.

The group’s decision, led by Saudi Arabia and Russia, went further than analysts had predicted and put a squeeze on supplies in an already tight market.

The move also had an instant impact on the oil price, pushing the cost of Brent crude 2% higher, although it has since fallen back slightly to about $95 a barrel on fears of a global recession.

The AA said the rises in average petrol and diesel prices in recent days would pile more pressure on cash-strapped consumers.

“Diesel was always expected to go back up again, reflecting the seasonal trend of increased heating oil demand pressuring price on that part of a barrel of oil,” Bosdet said.

“However, not only is the rise in petrol prices a blow to UK drivers as domestic energy cost hikes now put the squeeze on family budgets, but petrol would normally be getting cheaper at this time of year after the US motoring season comes to an end.”

Bosdet said it was hoped the impact at the pump would be mitigated by retailers taking longer to pass on changes in wholesale fuel prices.