War fears will add to soaring UK energy bills
VLADIMIR Putin’s decision to invade Ukraine is set to significantly add to the UK’s spiralling cost-of-living crisis, experts warned yesterday.
Oil prices hit a seven-year high last night after the Russian president put his nation on a war footing.
And they are likely to rise further – sparking fears of yet more hikes in UK energy bills and on petrol forecourts.
With average heating bills already rocketing by around £700 to £2,000 a year in April, they could now jump even higher in the coming months.
And petrol prices – currently at record highs – are on course to hit the grim milestone of £1.50 per litre as a result of Russia’s actions, market analysts warned.
The price of Brent Crude, an international benchmark, jumped to $99 (£73) a barrel yesterday amid fears that the Ukraine-Russia crisis will further disrupt world supplies.
Rocket
Experts warned that Brent crude will reach $100 a barrel in the coming days, as fears over dwindling supplies grow.The price was last at such a level in early September 2014.
Maike Currie, a director at investment experts Fidelity International, believes oil will rocket through the $100-per-barrel barrier any day, due to a combination of the Ukraine crisis, a cold winter in the US, and a lack of investment in oil and gas supplies worldwide.
She said: “Russia accounts for one in every 10 barrels of oil consumed globally, so it is a major player when it comes to the price of oil, and it’s really going to hurt consumers at the petrol pumps.” Victoria Scholar, head of investment at Interactive Investor, said: “Sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer. If Putin continues his aggression and the threat of war becomes a reality, oil prices could easily push towards $120 a barrel to highs not seen since 2014.”
The boss of Ofgem recently warned MPs that war in Ukraine would inevitably drive already spiralling UK energy prices further upwards.
Jonathan Brearley, chief executive of Ofgem, said: “The Russia-Ukraine situation will clearly have an impact on supply and that will clearly have an impact on price.
“It does look like there is upward pressure on prices.”
Despite fears over dwindling supplies, Business Secretary Kwasi Kwarteng yesterday tried to reassure MPs. He told them: “Our supply of gas is secure. Unlike many EU countries we are not dependent on
Russian gas. Much of our supply comes from British territorial waters and from reliable import partners, such as Norway.”
But shadow business minister Seema Malhotra said the Government’s national insurance increase “will make a bad situation for British businesses even worse”.
This week, UK petrol and diesel prices hit record highs. Petrol reached 149.1p a litre on Monday, meaning it now costs £81.95 to fill a 55-litre family car, while diesel also reached a record at 152.6p, making a similar-sized full tank almost £84.
The RAC blamed the rise on profiteering by petrol retailers – but also on the already stubbornly high oil prices caused by growing tension between Russia and Ukraine. This is now expected to worsen as soldiers march into Ukraine. It comes as inflation has reached a 30-year high of 5.5 per cent and has been predicted to reach eight per cent in April.
Higher fuel prices also drive up costs for businesses that rely on transporting goods, potentially leading to further increases. RAC fuel spokesman Simon Williams warned: “Hikes in petrol prices will also likely be seen alongside further rises in energy prices as the cost of Brent crude goes up, adding to the already spiralling cost of living crisis in the UK.
“Russia’s decision to invade Ukraine has already caused oil prices to rise and will undoubtedly send fuel prices inexorably higher towards £1.50 a litre.”
‘Unlike many EU countries we are not dependent on Russian gas’