Saudi oil attacks: are fuel costs about to skyrocket?

fuel price rises saudi attacks

The attacks on Saudi oil facilities and the subsequent reaction in the oil markets are raising concerns over where price of fuel will go. More specifically, are prices about to increase?

The attacks are reported to have knocked out over half of the country’s crude oil output. The result was a 20 percent price jump, to over $57 a barrel. This is the biggest percentage increase in three decades.

“In the oil universe, this attack is perhaps equivalent to the 9/11 attacks,” said Tilak Doshi, a representative from oil and gas consultants Muse, Stancil and Co.

fuel price rises saudi attacks

“Abqaiq is easily the world’s single most important oil production and processing infrastructure site.”

Saudi oil attacks: how will it affect UK fuel costs?

The RAC has addressed what the attacks mean on UK soil. “There was an inevitable initial panic-driven surge in the oil price on Monday morning, but the situation then cooled,” said RAC spokesperson, Simon Williams.

“While the wholesale prices of both petrol and diesel look set to increase by 3p a litre, this doesn’t necessarily mean higher prices at the pumps because retailers only just began to pass on overdue wholesale price savings at the end of last week. At that point the 128p forecourt price of petrol was 7p too high which means retailers should have a cushion to absorb the spike.”

fuel price rises saudi attacks

In short, UK fuel suppliers are in arrears with the consumer. That’s to say, there should be savings to come before the prices at the pumps reflect the events overseas. Or, at the very least, the price shouldn’t fly like many are predicting. Not in the short term, anyway. Williams continues:

“If the barrel price remains high for a sustained period however, it could easily lead to several pence a litre being added to the average price of both fuels. Even after Friday’s 3p supermarket cut petrol is still averaging 127.77p and diesel 131.26p.”

Oil supply disruption: is there a plan B?

fuel price rises saudi attacks

“We are hopeful the fact the US is releasing emergency oil stocks and that Saudi Arabia operates a global storage network will mean that drivers here in the UK will not be too harshly affected.”

As above, oil operations on this kind of scale are global. This specific attack shouldn’t leave UK drivers pinching pennies at the pumps. It will be in the interests of all to soften the blow on consumers.