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British drivers are already feeling the impact of surging oil prices and 2020 could see fuel prices rise even further, U.K. motor company the RAC said.
Four months of falling petrol prices came to a halt at the end of December with pump prices in the U.K. rising, according to data from the auto services company. The price of unleaded rose 0.24p to 126.11p and diesel prices climbed 0.87p the company’s data showed.
It came after oil prices climbed nearly 5% in December close to three-month highs as U.S.-China trade tensions eased. After the U.S. killing of top Iranian general Qassem Soleimani last week oil prices have soared even higher with Brent crude futures BRN00, -1.04% reaching $70 per barrel.
The RAC said that December’s price gains were already being felt by motorists across the country.
RAC fuel spokesman Simon Williams said: “This situation very clearly demonstrates how U.K. drivers are at the mercy of global oil production issues when it comes to filling up. The trade dispute has helped keep a lid on oil prices and, in turn, petrol and diesel pump prices.”
The assassination of Soleimani saw Brent crude futures surge above $70 per barrel before dropping back to $68.31 on Tuesday as investors re-evaluated supply risks in the Middle East.
ING’s head of commodities strategy, Warren Patterson said the market was awaiting “any signs or hints on how Iran may retaliate to last week’s U.S. airstrike.” He added that fears over supply disruptions were not isolated to Saudi Arabia though, with worries also over Iraqi supply but that without further retaliation or disruption oil prices would trend lower in the first quarter of the year.
While the recent rise is yet to be felt by motorists, the quick impact of December’s hike suggests drivers’ pockets could soon be hit again.
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Williams said: “As we embark on a new decade it is difficult to see that 2020 will be a good year for drivers in terms of fuel prices.
“As it stands we can’t see any reason for prices to come down significantly. Sadly, it seems more likely that there will be slight increases to contend with, unless of course there is a substantial jump in the value of the pound against the dollar or an unexpected drop in demand for oil.”
The oil price surge has helped the FTSE 100 UKX, -0.02% and its oil majors BP BP, -0.79% and Royal Dutch Shell RDSA, -0.58% , although both gave back some of those gains on Tuesday.
