OIL prices jumped again after EU leaders agreed a deal to block two-thirds of Russian oil imports to starve Vladimir Putin’s war machine of revenues.
While that deal agreed overnight, which bans oil that arrives by sea but not by pipeline, was hailed as a political break through, it further constrains supply.
That will lead to more pressure at the petrol pump and more inflationary pressure on already seriously squeezed households.
The cost of filling a family car passed £100 for the first time at the weekend, hitting 182.6p a litre.
Oil investors are reaping gains in equity prices and City traders are under attack for making a bad situation worse.
A barrel of brent crude today hit $123 – it was around $121 yesterday. Shares in BP rose 7p to 441p, Shell was up 46p to 2420p – its shares have gained 75% in the past year.
Howard Cox, Founder of FairFuelUK Campain, told the Standard: “Sadly, pump prices are influenced by city speculators. Any global market volatility is manna from heaven, for these greedy opportunists to make even more money from the world’s highest taxed drivers. Whilst UK’s crude oil imports from Russia are at about 8% and diesel at 20%, pump prices will definitely climb to record heights, because of uncertainty, not rational business sense or oil company management acumen.”
Inflation is set to keep going. The Bank of England expects it to peak at 10%, a forecast that looks under pressure.
Central banks across the globe are ramping up interest rates at the fastest pace for 20 years to control price rises – there has been 60 rate rises in key rates in the last three months alone.
While the aim is to control inflation, critics say the bankers are behind the curve and warn higher borrowing costs could just serve to hit economic growth.
Duncan Goodwin at Premier Miton Investors said: “Alongside fuel, food price inflation can have a material impact on the disposable income of an average consumer. We expect food prices are likely to stay high for the next 6 months. The supply side response to higher prices is likely to take time and with the US harvest looking as if it could be smaller this year, supply and demand balances globally look to remain under pressure.”
What effect the Russia ban could have on fuel prices is not yet clear but seems sure to be inflationary. Russia currently supplies 27% of the EU’s imported oil and 40% of its gas. The EU pays Russia around €400bn (£350 billion) a year in return.
