‘Watershed moment’ on fuel prices: Warnings of worse to come as petrol passes £7 a gallon

UK fuel prices have soared to new record highs, with the average cost of a litre of diesel rising to £1.61, with no end in sight for spiralling pump costs.

Data from Experian Catalist reported by the AA also showed unleaded at £1.55 on Sunday as the impact of Russia’s invasion of Ukraine continued to be felt at forecourts.

The latest average costs were revealed hours after oil prices surged further, hitting $139 for a barrel of Brent crude, after confirmation from the United States that it was considering, along with European allies, a boycott of Russian oil and gas.

Ukraine invasion: Live updates

Brent had started the day at $118.

Advertisement Image: Brent crude oil costs rose sharply early on Monday, signalling the likelihood of more pump pressure to come through March

While petrol prices are important for UK motorists generally, rising diesel costs are seen as a greater economic threat as the fuel is the backbone of UK industry – accounting for the vast majority of vans and all HGVs.

Sky’s Ian King says there is a huge risk of a downturn in the West if Russian oil and gas are banned as previous similar oil price spikes and embargoes, such as those that followed the Yom Kippur War and the Iranian revolution in the 1970s, led to recessions.

More on Russia

Ukraine war: Boris Johnson defends UK support for Ukrainian refugees and says ‘nothing is off the table’ when it comes to sanctions

Netflix suspends streaming service in Russia amid Ukraine war

Steel tycoon Sanjeev Gupta agrees on tax deal with HMRC as they withdraw winding-up petitions

Related Topics:

Petrol has now reached 155.62p a litre while, and diesel averaged 161.28p, the AA said.

A year ago, they averaged 124.32p and 127.25p a litre respectively.

AA fuel price spokesman Luke Bosdet said it meant that the cost of filling up an average 55 litre tank was almost £17 more expensive, with a gallon of fuel now passing £7 for the first time, as there are 4.54 litres in a gallon.

Mr Bosdet said: “A year ago, with pump prices rising steadily after the pandemic slump, 125p a litre was bad news but 155p was unimaginable.

“Although with every pump price surge a slump eventually follows, notwithstanding the fuel trade’s reluctance to pass on savings quickly, £7 a gallon could well be a watershed moment.”

Read more:Gas costs hit new record and oil soars beyond 2008 high as Russia boycott consideredNetflix, American Express and TikTok cut services in RussiaAccountancy giant PwC to exit Russia as multinational exodus growsThe inflation index signalling a 1970s-style leap in prices is looming large

RAC fuel spokesman Simon Williams said: “These hikes are unprecedented and will sadly be hitting both homes and businesses hard.

“It’s therefore vital the chancellor acts quickly to limit the damage by cutting VAT to at least 15% which would save drivers 6.5p a litre and take the average price of unleaded back under £1.50.

“Importantly, this could also limit the impact of inevitable fuel price rises in the coming days and weeks.”

Image: A weakening of the pound makes dollar-priced oil more expensive

VAT is currently charged at a rate of 20% on petrol and diesel.

The campaign group FairFuelUK claimed prices were up to 14p a litre higher than they needed to be – when wholesale costs and currency exchange rates were taken into account.

Its founder, Howard Cox, called on Rishi Sunak to cut fuel duty and take a series of additional actions as the Treasury benefits from the surging prices.

“With over half of the cost of a litre of diesel accounted for by tax, we firmly believe that action should be taken to back UK hauliers and keep consumer prices under control through the introduction of an essential user rebate of 15p per litre.

“This step would mirror an approach taken by many other European nations including Spain, France and Italy which has proved successful,” he said.