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Oil prices surge to seven-year high

Written by: Emma Lunn
The cost of living crisis looks set to worsen as the price of Brent crude oil surges above $89.5 a barrel for the first time since 2014.

The escalating situation surrounding Ukraine, with the standoff continuing between Russia and NATO members had already pushed up the price, but supply constraints with a drop in US inventories registered, saw it edge up by another 1.5% yesterday. Forecasters predict that the price could hit as much as $120 a barrel.

The oil price will impact UK consumers, already struggling due to increased food and energy prices, as it feeds through to petrol and diesel prices.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Consumers are belting up and bracing themselves for a fresh squeeze in the cost of living as a jump in the oil price is set to see forecourt prices ticking up again. With price rises coming from all directions, the prospect of filling up at the pumps becoming yet more expensive will be hard to swallow, especially for commuters steeling themselves for the return to the office as plan B restrictions are lifted.

“Although the price of a barrel of Brent won’t immediately translate to mirror a similar price hike at the pumps, due to other factors to consider, such as refining capacity and demand for other oil fractions, petrol prices do follow oil’s trajectory albeit on a flatter curve. After Brent reached a three year high in October of $86.9, prices at the pumps hit a 12-month high a few weeks later of 147.72p and diesel at 150.96p. Already prices are edging back close to those levels, with average petrol prices at 146.06p and diesel 149.42p, according to the RAC.”

This week has seen the International Monetary Fund wade into the political waters surrounding high energy bills, urging the UK government to bring in targeted help for poorer households. Other organisations that have called for more help for vulnerable people include Citizens Advice and Age UK.

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