Prices at the pumps set to rise after oil climbs again

MOTORISTS face higher prices at the pumps as the price of oil heads back towards $ 50 a barrel.

OPEC – the Organisation of the Petroleum Exporting Countries – this week agreed to modest cuts in oil output in the first such deal since 2008.

The agreement, which still needs to be rubber-stamped at the next formal OPEC meeting in November, pushed the price of crude up to as high as $49.50 a barrel.

The rise in the price of oil spells bad news for motorists as it pushes up the cost of petrol and diesel.

But it is good news for investors in oil companies – with Shell shares up more than 6pc and BP shares up more than 4pc yesterday.

Mining stocks were also on the rise with BHP Billiton and Anglo American also gaining more than 6pc on the FTSE 100 index.

The price of oil has plummeted from $115 a barrel two years ago to less than $50 a barrel as plentiful supply outstrips weak demand.

OPEC and other oil producing nations have until now refused to cut supply – a move they traditionally make to prop up prices.

But after several hours of talks in the Algerian capital of Algiers on Wednesday, a cut in production was finally proposed.

RAC fuel spokesman Simon Williams said prices at the pump could rise from their current level of 112p a litre for petrol and 113p for diesel.

But he added that a return to the ‘dark days’ of 2012 – when unleaded was 142p a litre and diesel was 148p – was unlikely.

‘From a motorists’ perspective we don’t feel there is cause to panic as, while pump prices may rise a little in the short term, we are very unlikely to see a return to the dark days of April 2012,’ said Williams.

‘There is some way to go before motorists experience any major pain at the pumps, especially as the actual cost of the fuel only represents around a third of the pump price, with the lion’s share being made up of fuel duty and VAT.’