Petrol prices set to rise as cost of oil is driven up by record demand and cuts in supply
Global oil demand is set to rise, driving up petrol prices, the International Energy Agency (IEA) has warned.
World oil demand is set to grow by 2.2 million barrels a day (bpd) as China’s economy begins to reawaken, the agency said in its oil market report.
Oil and petrol prices could start to rise sharply as a result of Opec+ countries such as Saudi Arabia cutting back supplies, it added.
World oil demand hit a record 103 million bpd in June and August and could see yet another peak, according to the IEA.
A rally in oil prices saw Brent crude hit peaks of more than $88 a barrel on Thursday, the highest since January.
The major oil producers of Opec and its allies, together known as Opec+, began limiting supplies last year to bolster the market, and in June they extended supply curbs into 2024.
If Opec+ oil production targets are maintained, oil reserves could fall by the autumn and winter, “with a risk of driving prices still higher”.
Motoring organisations have warned the cheaper petrol pump prices seen by drivers are over. The RAC said the average price of unleaded petrol is £1.48, and £1.49 for diesel as retailers quickly passed on the increases. Filling up an average family car will now cost more than £80.
Rising prices will add pressure on retailers to ensure they offer the most competitive rates to consumers. Energy Secretary Grant Shapps claimed households are “not getting a fair deal on fuel and are being overcharged”.
The Competition and Markets Authority (CMA) is planning to launch an interim voluntary system for retailers to publish fuel prices by the end of the month and Mr Shapps warned fuel retailers he will “call out any foot-dragging” over the sharing of pump price data.
Prices could drop sharply next year, the IEA believes, as demand is forecast to slow to one million bpd.
“With the post-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiency standards and new electric vehicles weigh on use, growth is forecast to slow to one million barrels daily in 2024,” the IEA said.
Its forecast is lower by 150,000 bpd from last month. Opec+ forecast earlier this week that oil demand will rise by a much stronger 2.25 million bpd in 2024.
“The economic outlook is still challenging in the face of soaring interest rates and tighter credit, squeezing businesses that are already having to cope with sluggish manufacturing and trade,” the IEA said.
It added that global oil supply fell by 910,000 bpd in part due to a reduction in Saudi output. But Russian oil exports held steady at around 7.3 million bpd.
“Deepening Opec+ supply cuts have collided with improved macroeconomic sentiment and all-time high world oil demand,” the energy watchdog said.
