Petrol and diesel hit new record high as oil costs increase

Petrol and diesel pump prices have hit a new record at UK forecourts, with fears they could increase further as tensions mount in Ukraine. 

Petrol hit a new record high on Sunday (February 12) when the average price of a litre topped 148p for the first time ever (148.02p). The previous high price was set in late November at 147.72p.

Diesel has also reached a new all-time high at 151.57p.

RAC fuel spokesman Simon Williams said: “Petrol has unfortunately hit a frightening new high of 148.02p which takes filling a 55-litre family car to an eye-watering £81.41.

"With the oil price teetering on the brink of $100 a barrel and retailers keen to pass on the increase in wholesale fuel quickly, new records could now be set on a daily basis in the coming weeks."

Brent crude hit $96.16 a barrel in the past few days, its highest since October 2014, leading the RAC to urge retailers not to pass the wholesale cost increase on to drivers.

The cost of oil has increased by more than 60% in the past 12 months, from around $60 last February, due to global oil production continuing to be out of kilter with demand, which is now increasing as the pandemic begins to wane.

Recent tensions between Ukraine and Russia, with the latter being the world’s third biggest oil producer, have also caused prices to rise.

Williams said: "The oil price is rising due to tensions between Russia – the world’s third biggest oil producer – and Ukraine, along with oil production remaining out of kilter with demand as the world emerges from the pandemic. As a result drivers in the UK could be in for an even worse ride as pump prices look certain to go up even more.

“On a positive note, retailer margins – which were the reason drivers paid overly high prices in December and January – have now returned to more normal levels of around 7p a litre.

"We urge the big four supermarkets, which dominate fuel sales, to play fair with drivers and not to make a bad situation on the forecourt any worse by upping their margins again.”

RAC Fuel Watch data suggests if oil were to reach $110 a barrel, and retailers kept their current margin, it would add about 7p to a litre of unleaded diesel, taking average prices to new levels of 154p and 158p respectively.

Giovanni Staunovo, commodity analyst at UBS, told Reuters that there is concern a conflict between Russia and the Ukraine could “disrupt supply”.

He added that the oil market is very sensitive to any news of potential supply disruptions as oil inventories are low and spare capacity at oil producers is expected to fall further.

The tensions come as the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to ramp up output despite monthly pledges to increase production by 400,000 barrels per day until March.

Fleets feel fuel price hike

For fleets, the high prices will put businesses under further financial pressure. Jez Lamb, founder of the Wirral-based craft beer marketplace, Beers at No.42, said: "Delivery vans don't run on fairy dust and we're being absolutely hammered right now. 

"As a business that ships throughout the UK, we rely heavily on the courier network, which will inevitably pass on the rising fuel prices in what is termed the 'fuel surcharge'," he added. "The big question is, do we pass that on to our own customers.

"Wherever we can, we try to absorb these costs as much as we can but margins are being squeezed everywhere. Something has to give and unfortunately smaller businesses, as ever, are the ones to suffer."

Adam Bamford, co-founder at Derby-based corporate gifting company, Colleague Box, is also feeling the squeeze. He said: "Fuel increases just add to the avalanche of price rises we've seen recently.

"In a few quick months we've gone from pushing the business to be consistently profitable to striving to break even. Next stop on the seemingly endless road of pain is the National Insurance increase."

Jamie Rackham, founder of Facebook group, Not on Amazon, where nearly 190,000 independent makers sell their products for free, added: "Stupidly high fuel prices are another slap in the face for the millions of small and micro businesses trying to survive.

"A significant percentage of our members travel to markets to sell their products and the cost just to get to them is skyrocketing. Once you factor in rising energy prices and raw material costs, the financial pain is amplified."

Fleet News has teamed up with Allstar to bring you the fuel prices locator, enabling you to compare fuel prices and find the cheapest petrol or diesel in your area.

Even one penny per litre can make all the difference when filling up your fleet vehicles, potentially saving your company thousands of pounds a year.

Average pence per litre and per gallon petrol and diesel fuel prices in the UK regions includes England, Scotland, Wales and Northern Ireland. To access the latest fuel prices, click here.