Fuel prices jump as cost of oil rises

Fuel prices jump as cost of oil rises
Drivers’ fuel bills jumped in September as the rising cost of oil put pressure on retailers to increase prices at the pumps.

According to figures from RAC Fuel Watch, a litre of diesel rose by 42p to 113.34p at the end of last month – the highest average cost since August 2015.

Meanwhile, average petrol prices were also up by 0.48p to 112.07p, just short of the 2016 peak of 112.33p.

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The price rises mean filling up an average-sized family hatchback with petrol is over £5 more expensive than at the start of the year, while a tank of diesel is £4 more than in January.

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The cost of oil - the biggest variable affecting UK fuel prices - went up 8% in September, finishing the month at 48 US dollars a barrel.

Oil producing group Opec reached a deal last week to stabilise the market by slashing output, in an attempt to stabilise the price of oil and in turn the cost of fuelling up.

RAC fuel spokesman Simon Williams said: “A higher oil price, combined with a weakening pound, is forcing up wholesale fuel prices.

“The wholesale price of diesel is now nearly 9p higher than it was at the start of August, and petrol 7.4p higher. The effect of this to date has been gradually rising pump prices.

“While we don't envisage an immediate hike in prices in October, a lot depends on how markets react to the recent news of the first production cut by Opec nations since 2008, which marks a major move away from the organisation's long-term over-supply strategy.

“The announcement has already caused oil prices to jump a little, but until more specific details are available it is difficult to predict what the longer term outlook on pump prices, and therefore impact on motorists, will be.”

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In the wake of Opec’s decision to cut output, the cost of Brent crude – which sets the benchmark price for oil purchases worldwide – rocketed by 5.9% to $48.69, though this has since settled at around the $45 mark.

The agreement will see production scaled down from around 33.24 million barrels per day to a range of between 32.5 million and 33 million barrels.

Representatives from Opec will meet again in November to iron the precise details of the cut in production.

Copyright Press Association 2016. Motoring News articles do not reflect the RAC's views unless clearly stated.