How to Avoid Crude Oil Price Hikes to Save Money
Crude Oil Prices Increase Following Iraq Missile Attacks
The BBC has reported a 0.85% increase in oil prices after two US bases in Iraq have been hit by airborne missiles as a result of an escalation in geopolitical instability in the region. During the Asian trading session, Brent Crude (one of the major classes of crude oil) was up by 1.4% at $69.21 per barrel.”
As a result, red diesel users may be wondering if recent tensions in the Middle East will result in petroleum product price rises.
Drivers are already feeling the effects of the rocketing oil prices of around 1p more per litre at the pump, with rising tensions between the US and Iran set to push them even higher, says the RAC.
Why are crude oil prices being affected by the conflicts?
Escalating tensions between the US and Iran could disturb shipping in The Strait of Hormuz, which sees around a fifth of global oil supplies pass through its waters.
This area is invaluable for Saudi Arabia, the UAE, Iraq and Kuwait, the main oil exporters in the Gulf region, whose economies are based around oil and gas production.
Iran also uses this route for its oil exports, as well as Qatar, the largest producer of liquefied gas (LNG) which exports the majority of its gas through the strait.
Any disruption in the region, and to the ability of these oil-producing nations to export their oil by sea, would see a drastic reduction of available crude oil stocks worldwide. As supply would fall against rising demand, consumers could expect to pay more for essential fuels.
In the UK, 40% of crude oil imports come from Norway, but the barrel price of this oil will still no doubt be impacted by Middle East geopolitics.
Are there other factors at play?
Brian Madderson, the chairman of the Petrol Retailers Association claims oil prices were set to rise regardless and has discouraged any link between the conflicts in the Middle East and the US.
However, the price of oil has spiked by around 6.7% since Donald Trump ordered a drone strike which killed General Soleimani. Simon Williams from the RAC claims price increases are likely to continue if tensions grow.
But the price of oil isn’t the only factor that affects prices at the pump.
UK motorists pay the highest rates of fuel tax in Europe, with around 82p added to every litre of fuel bought. The remaining cost depends on what your filling station paid for it; however, the new UK government is yet to set out its 2020/21 budget, and any changes to Fuel Duty and VAT would have an effect on forecourt prices.
Fluctuations in the value of the pound can also affect pump prices because oil is priced in dollars. So, if the pound weakens against the dollar, a UK retailer will have to pay more to purchase oil, costs which will be picked up by the consumer.
How to avoid crude oil price hikes
- Purchase in plenty of time to avoid last-minute orders
- Buy fuel in bulk to benefit from bigger savings at once
- Opt for fossil-free fuel such as HVO fuel
- Take advantage of our standard 24-48h fuel delivery service
At Crown Oil, thanks to our vast buying power, we purchase all of our fuels in bulk which enables us to lock in competitive prices and then pass on these savings to you.
If you have any questions about our fuels and lubricants, or you’d like to request a quote based on today’s prices or place an order. You can do so by calling our knowledgeable team on 0330 123 1444 to receive a competitive price on the fuels and lubricants we supply nationwide.
