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| UK petrol prices set to rise after Opec deal | |
| (35 minutes later) | |
| Petrol prices in Britain are set to rise after the Saudi-led Opec cartel agreed its first production cut in eight years, sending the price of oil surging. | Petrol prices in Britain are set to rise after the Saudi-led Opec cartel agreed its first production cut in eight years, sending the price of oil surging. |
| This could push up petrol prices by as much as 9p a litre, adding almost £5 to the cost of filling up an average family car, according to motoring organisations. Higher oil prices could also push up household energy bills as wholesale gas prices tend to track the price of crude. | This could push up petrol prices by as much as 9p a litre, adding almost £5 to the cost of filling up an average family car, according to motoring organisations. Higher oil prices could also push up household energy bills as wholesale gas prices tend to track the price of crude. |
| Opec, whose 14 members pump a third of the world’s oil, announced at a meeting in Vienna on Wednesday that it would trim production by 1.2m barrels a day to 32.5m from 1 January. Russia, the largest non-Opec producer, has also agreed to reduce its output gradually. | Opec, whose 14 members pump a third of the world’s oil, announced at a meeting in Vienna on Wednesday that it would trim production by 1.2m barrels a day to 32.5m from 1 January. Russia, the largest non-Opec producer, has also agreed to reduce its output gradually. |
| The news sent Brent crude, the global benchmark, 8% higher to more than $50 a barrel. Brent rose a further 0.6% to $52.42 a barrel on Thursday, trading around a six-week high, while New York crude climbed over $50 a barrel for the first time since the end of October. | The news sent Brent crude, the global benchmark, 8% higher to more than $50 a barrel. Brent rose a further 0.6% to $52.42 a barrel on Thursday, trading around a six-week high, while New York crude climbed over $50 a barrel for the first time since the end of October. |
| The AA estimates that a rise in crude oil prices to $60 a barrel would push petrol prices including VAT up 9p a litre to about 123p a litre. That is £4.95 extra a tank and £18 extra a month for a family with two petrol cars – just as winter sets in and cars use more fuel to power heaters and lights. | The AA estimates that a rise in crude oil prices to $60 a barrel would push petrol prices including VAT up 9p a litre to about 123p a litre. That is £4.95 extra a tank and £18 extra a month for a family with two petrol cars – just as winter sets in and cars use more fuel to power heaters and lights. |
| Luke Bosdet, a spokesman for the AA, said: “Not only is this the fourth jump to $50 a barrel so far this year, but it also comes at the wrong time. With winter motoring cars consume more fuel.” | Luke Bosdet, a spokesman for the AA, said: “Not only is this the fourth jump to $50 a barrel so far this year, but it also comes at the wrong time. With winter motoring cars consume more fuel.” |
| Changes in oil prices feed through to petrol prices after 10 to 14 days. Bosdet deplored that oil prices were driven more by “feverish speculation” than actual changes to production. He added: “The only silver lining is that oil hasn’t taken off massively.” | Changes in oil prices feed through to petrol prices after 10 to 14 days. Bosdet deplored that oil prices were driven more by “feverish speculation” than actual changes to production. He added: “The only silver lining is that oil hasn’t taken off massively.” |
| RAC fuel spokesman Simon Williams said oil prices would rise further in coming days and weeks, “likely pushing pump prices up in the short term, but it is what happens into 2017 that will be most important in determining if the days of relatively low prices of fuel that drivers have benefited from this year are coming to an end”. | RAC fuel spokesman Simon Williams said oil prices would rise further in coming days and weeks, “likely pushing pump prices up in the short term, but it is what happens into 2017 that will be most important in determining if the days of relatively low prices of fuel that drivers have benefited from this year are coming to an end”. |
| Petrol prices dropped sharply in early 2016 to about 100p a litre when oil plummeted to below $27 a barrel, amid an oil glut. Iran ramped up production after international sanctions on the country were lifted. | Petrol prices dropped sharply in early 2016 to about 100p a litre when oil plummeted to below $27 a barrel, amid an oil glut. Iran ramped up production after international sanctions on the country were lifted. |
| At present, fuel prices average 114.16p for unleaded and 116.36p for diesel, according to website PetrolPrices.com. | At present, fuel prices average 114.16p for unleaded and 116.36p for diesel, according to website PetrolPrices.com. |
| Williams noted that the sterling-dollar exchange rate was also crucial – as oil is traded in dollars a weaker pound can push prices in the UK up, as has happened since the Brexit vote in late June. | Williams noted that the sterling-dollar exchange rate was also crucial – as oil is traded in dollars a weaker pound can push prices in the UK up, as has happened since the Brexit vote in late June. |