On Monday, Brent crude oil surged by $5 per barrel to trade near $85 per barrel, increasing almost 6% after Saudi Arabia and other OPEC+ producers announced new production cuts.
The surprise move resulted in cuts to the production of about 1.16 million barrels per day. Energy shares benefited from the jump in oil prices, but the news raised concerns among investors about the impact of higher costs for businesses and consumers.
The RAC expects a rise in fuel cost if “the barrel price stays higher for several days”, RAC fuel spokesman Simon Williams told the BBC.
Goldman Sachs revised its forecast for Brent to $95 a barrel by the end of the year and $100 for 2024 due to the oil output change.
The production cut was likely implemented as a precautionary measure to secure a higher oil price. The cut comes at an unfavourable time, with demand from China picking up pace after reopening.
The International Energy Agency (IEA) anticipates oil demand to rise by 2 mb/d in 2023, half of which is attributed to increased Chinese demand.
Proposed measures to strengthen UK fuel supply chain – The government is consulting on whether fuel tankers should be allowed to carry more fuel in a move designed to further strengthen the UK’s fuel supply chain.
The potential to allow tankers to operate to their full design train weight could increase the efficiency of the fuel supply chain by approximately 6%.
The UK and Ireland Fuel Distributors Association (UKIFDA) revealed its member Mitchell and Webber undertook the first lifting of US-imported hydrotreated vegetable oil (HVO).
The industry has demonstrated across 150 homes and businesses in the UK that HVO can be used as a direct replacement for heating oil, reducing carbon emissions by up to 88%.