Fuel Price Pulse – 8th November

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices. Wholesale prices are influenced by a range of factors, including supply, demand and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Prices per litre have risen slightly compared to the same time last week.

OPEC+ increase delayed

On Sunday, OPEC+ announced that it would extend its output cut of 2.2 million barrels per day (bpd) until January 2025. The increase was already delayed from October because of falling prices and weak demand.

A quick reminder of why this is important: The Organisation of the Petroleum Exporting Countries (OPEC) manages oil production in its member countries by setting production targets. With member countries responsible for about 40% of the world’s crude oil (and 60% of petroleum traded globally), crude oil prices trend to increas when OPEC production targets are reduced.

Middle East Tensions

Oil prices were further impacted by reports that Israeli intelligence suggested Iran is preparing to attack Israel from Iraqi territory.

If a full-scale war were to break out between Israel and Iran, the impact on global energy supplies and the transportation of oil through the Strait of Hormuz could be severe, resulting in significant increases in oil prices and potentially damaging the global economy.

The US Election

Trump’s recent election win has strengthened the U.S. dollar relative to the pound, which is adding resulting in increased oil prices in the UK. Energy markets are speculating about what Trump’s presidency means for oil and gas prices – with expectations about his policies on trade, energy production, and foreign relations adding layers of uncertainty and speculation, creating upward pressure on global oil prices.

The latest DOE reports have been released showing a larger than expected demand decrease of 1.899 million barrels per day in the US. This has caused the rise in the market to slow.

Next week’s fuel prices

With no additional supply from OPEC expected soon and a heightened risk of conflict in the Middle East, we anticipate that the market will continue to rise through the remainder of this week and likely into next week.

Businesses and drivers can reduce costs further by opting for a fuel card. In 2023, customers of The Fuel Store saved an average of 12 ppl off forecourt costs.