The cost of filling a 55-litre diesel tank in the UK has returned to £100 after Brent crude rallied back above $80 a barrel, reversing a slide driven by hopes of a Strait of Hormuz deal. Capital Economics says Gulf oil supply will likely stay constrained for months, capping how far prices can fall.
Diesel and petrol back near war highs
The average UK diesel price rose almost 17p a litre to 181.5p, a 10% increase from a conflict low of 164.5p on 9 July, the RAC motoring group reported. RAC head of policy Simon Williams said that filling a 55-litre family car with diesel costs £100 again, a level drivers haven't faced since early June.
Petrol has climbed too. The average litre price hit a new Iran-war high of 161.5p on Wednesday, up nearly 11p, or 7%, since its 6 July low. Williams added that the petrol equivalent now costs £89, the highest since the Middle East war began on 28 February.
Brent crude rebounds above $80
Brent crude, the global benchmark for crude oil, rose $1.35 to $80.71 a barrel, a 1.7% increase, after prices fell sharply over the previous two days on hopes of an interim US-Iran deal allowing safe tanker traffic through the Strait of Hormuz. Yemen's Iran-aligned Houthi rebels said they attacked a Saudi oil tanker in the Red Sea.
According to RAC's Simon Williams: "hope on the horizon for drivers". He said daily price rises should stop, and reductions should follow, if crude stays around $80 a barrel.
Outlook: supply still tight
David Oxley, chief climate and commodities economist at Capital Economics, said the reduced risk of worse outcomes still leaves Gulf energy supply likely to remain constrained for months, limiting further declines in prices. The firm's baseline forecast has Brent crude ending the year at $75 a barrel. European natural gas prices are expected to hold near €50-55 per MWh through the northern hemisphere winter.
Middle East oil exports have picked up since a May low but were still nine million barrels a day below pre-war levels in July, Capital Economics said. Commercial oil stocks, it added, could still flirt with severely depleted levels in the third quarter even if the strait reopens quickly.
Source: Business | The Guardian
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