The conflict in the Middle East has led to a 10% jump in oil prices, sparking concerns over potential increases in fuel costs for motorists.
According to the AA motoring group, if the restrictions on oil shipments through the Strait of Hormuz persist, fuel costs could return to their levels at the start of the year.
The average price for petrol is currently 133.2p a litre, and 142.7p for diesel, based on AA data.
Impact on Fuel Prices
Simon Williams from the RAC said that a significant and sustained rise in oil prices could lead to higher fuel costs, with petrol potentially reaching 136p a litre if oil prices reach $80 a barrel.
Further rises will depend on the magnitude and duration of the conflict, according to the AA.
Broader Economic Implications
Higher fuel costs could have knock-on effects on the prices of goods, as businesses may pass on increased transport costs to consumers.
Benjamin Goodwin, partner at PRISM Strategic Intelligence, noted that some elements of crude oil are used in fertiliser, which could lead to cost implications for food prices.
Energy Bills and Inflation
Millions of UK householders' domestic gas and electricity bills are shielded from any impact on wholesale costs paid by suppliers, at least in the short term.
However, the impacts of the conflict could potentially be seen on domestic variable energy tariffs from the subsequent price cap, for the three months from July.
Subitha Subramaniam, chief economist at Sarasin & Partners, said that if crude prices remain elevated, it could lead to increased inflation, affecting prices of food, agriculture, and industrial commodities.
