A hike in fuel costs will increase the price of groceries and food in restaurants, the Federation of Wholesale Distributors has warned, as drivers and businesses were hit by a daily rise in diesel prices.
Oil prices have soared amid concerns over the reliability of supplies due to Russia’s invasion of Ukraine - now entering its third week.
The price per barrel of Brent crude – the most commonly used way of measuring the UK’s oil price – reached 139 US dollars on Monday, which was its highest level in 14 years.
Oil prices will continue to rise with Russian exports disrupted due to payment issues, counterparty decisions and the Black Sea war risk, said Robin Mills, CEO of UAE-based consultancy Qamar Energy.
Mills said the uncertainty and prospect of sanctions and interruptions is already having an impact on oil and gas prices.
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“Prices will go much higher if the war drags on; it will become unavoidable to impose sanctions on oil and gas purchases. Bans on financial transactions and self-sanctioning will disrupt Russian exports, even if the Russians don’t cut them themselves.”
The US vowed on Tuesday to ban Russian oil imports “to inflict pain on Vladimir Putin”
UK’s business secretary said, “it will phase out Russian imports of oil products by the end of 2022.” The European Commission, meanwhile, has announced a plan to reduce gas imports from Russia by two-thirds this year.
The trade body told the BBC its members would pass on transportation costs to food industry customers.
“Food price inflation is already happening, but this is going to make it worse, because there’ll be charges passed on to customers and then obviously to end users as well,” chief executive James Bielby told the broadcaster.
Figures from data firm Experian Catalist show the average cost of a litre of fuel at UK forecourts reached 165.2p, up nearly 3p on Monday’s 162.3p.
Hauliers have warned their profit margins are being wiped out due to rising diesel bills.
The petrol and diesel monitoring initiative RAC said the jump was the largest on records dating back to the year 2000.
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Additional reporting from PA