Fear over fuel prices amid Middle East conflict sends oil price surge

Motorists have been warned they face paying more at the fuel pumps as the conflict in the Middle East sends oil towards $80 a barrel.

The price of Brent crude oil - one of the benchmarks in the broader market - jumped to as high as $79 yesterday, up by 13 per cent since Tuesday when Iran launched its missile attack on Israel.

It prompted fears that recent falls in UK petrol and diesel prices will prove short-lived.

Meanwhile, the AA warned that drivers could face a 'double whammy' if Chancellor Rachel Reeves chooses to hike fuel duty in her Budget later this month.

The Bank of England has said it is closely monitoring the situation in the Middle East.

The crisis that erupted after Hamas attacked Israel last year has so far yet to cause major upheaval for oil markets - and petrol prices in the UK have recently hit three-year lows.

Read More

Huge blow to motorists who face fuel price hikes if Middle East conflict rages on

But experts fear the latest disturbance could have a major impact if the conflict widens to engulf the region or if Israel decides to target Iran's oil industry - a move that the US has revealed is being considered.

Ashley Kelty, research analyst at Panmure Liberum, said that if Iranian production is hit, other countries could ramp up supplies to make up for the shortfall 'but this would take some time to come to market which could see prices spike well above current levels for a period'.

He added that the 'only certainty at present is that volatility will remain very high'.

The price of Brent crude has already climbed sharply from below $70 earlier this week.

AA president Edmund King said: 'Drivers should be warned that any current pump price reductions are likely to be short-lived.

'Global oil prices tend to increase with any geopolitical global uncertainty.'

He added: 'The Government should avoid the temptation to hike fuel duty at the October Budget as this could backfire when oil prices increase.

'Drivers and industry would face a double whammy with increased oil prices and duty.

Read More

How US and UK have ramped up firepower in the Middle East to deter Iran from starting WWIII

'Increased fuel duty could be a catalyst for fueling inflation which is the last thing industry, and consumers, need right now.'

Howard Cox, founder of campaign group FairFuelUK, said: 'In the lead up to what is to be, as widely predicted, a punishing anti-driver Budget hike in fuel duty, the very worrying geopolitical instability in the Middle East will almost certainly add to a big increase in filling up prices at the pumps.'

The rise in the oil price has provided some cheer for UK-listed oil companies BP and Shell, whose shares have risen this week as a result of the spike.

Russ Mould, investment director at AJ Bell, said: 'This is good news for oil producers but bad news for millions of companies and consumers as they face higher energy and transport costs.'

RAC fuel spokesman Simon Williams said: 'Serious global events of this nature often cause a spike in oil prices which is never good for drivers in the UK, especially if it is sustained.

'Fortunately, since the start of May the price of petrol has fallen 15.5p from 150.3p a litre, and diesel from 18.5p from 158p.

'As pump prices have still been falling due to lower wholesale costs in recent weeks, there's the potential for this to cushion the negative effective of a rising oil price to some degree.

'We very much hope the current situation won't bring an end to the slightly better times at the pumps drivers have been benefiting from.'