Painful price increases at gas stations are the immediate consequence of unfolding events in the Middle East. The average cost of petrol has risen by almost 2.5p per liter and diesel by over 3p since Saturday. There have been reports indicating an 11p increase in some areas, prompting drivers to quickly refuel as a precaution.
Oil prices have already surged to over $82 per barrel, and the AA cautions that further fuel price hikes in the upcoming weeks are unavoidable. FairFuelUK estimates prices could go up by 5p to 10p per liter in the near future. Despite the looming price hikes, the current increase follows a period of low fuel costs, with petrol averaging 131.9p in February.
The closure of the vital Strait of Hormuz, responsible for shipping around a fifth of the world’s oil and gas, has instigated global market anxiety. While immediate oil supply concerns are mitigated by substantial stockpiles, ongoing disruptions could lead to escalating oil prices.
Approximately 60 days’ worth of oil reserves are available, but a significant depletion could trigger even higher price spikes. Escalating pump prices not only impact consumer confidence and household budgets but also have ramifications on various sectors, including food and transportation costs.
While households face financial setbacks, some entities benefit from surging fuel prices. Oil giants like BP and Shell witnessed a notable increase in their shares post-attacks. Additionally, Russia stands to gain economically as a potential supplier to countries affected by the Strait of Hormuz disruptions, potentially boosting President Putin’s revenues amid the conflict in Ukraine.