Brent crude, a benchmark for fuel prices, breached $96 a barrel on Friday amid predictions of shorter supplies.
The International Energy Agency (IEA) has warned that the decision by Saudi Arabia and Russia to reduce production could result in a “significant supply shortage” by the end of this year.
The RAC motoring group warned drivers were “in for a hard time” at the pumps.
Oil industry analysts polled by Reuters raised their price forecasts for 2023, with many seeing $100 for oil likely.
At the heart of this rise are OPEC, Saudi Arabia and Russia, major producers in the oil market who have implemented voluntary production cuts to increase profits. Saudi Arabia’s oil revenues could be $30 million a day higher this quarter than the last one, according to Energy Aspects analysis.
Additionally a recent fall in the pound may have made fuel even more expensive. As well as supply and demand, oil prices are also affected by the exchange rate between the pound and dollar, as Brent crude is traded in dollars.
Saudi Arabia and Russia have committed to reducing their production by an additional 1 million barrels per day and exports by 300,000 barrels per day, respectively, until the end of this year.
In September, China’s factory activity saw its first expansion in six months. Refiners are responding to the potential for increased demand by making substantial investments in expanding petrochemical production capacity.
Supported by expectation
Chinese demand will continue to grow, and the recently released PMI data from the weekend is expected to reinforce these concerns.