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UK drivers could face petrol price hike if oil cartel Opec scales back production

The i logo The i 06/12/2018 Katie Grant

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UK motorists could face a hike in fuel prices if members of the Organisation of the Petroleum Exporting Countries (Opec) agree to reduce oil production as it is believed they will, the RAC has warned.

Opec members nations - which include Saudi Arabia, Iraq and the United Arab Emirates - met on Thursday to discuss the scaling down of oil production in order to combat a 25 per cent price crash.

1m fewer barrels of oil every day

Major non-Opec producers including the US are pumping out oil at high rates, which is thought to have contributed to the decline in value of the commodity. Opec members met to discuss how much oil to remove from the global market, but put off their decision in order to thrash out a deal on Friday with ally Russia, which it hopes will contribute to the reduction in output.

Video: Why Opec talks are taking longer and getting more difficult (Bloomberg)

Saudi Arabia, the largest exporter of oil worldwide, previously announced plans to push for a cut of about a million barrels a day.

Arriving at the summit in Vienna, Saudi oil minister Khalid Al-Falih reiterated his country’s position, saying: "I think a million will be adequate personally.”

But upon leaving the meeting he said the cartel was “still deliberating" the distribution of the cuts between them.

Pushing up petrol prices

The RAC said in a statement yesterday evening: “Any agreement to curb oil production could push up the price, and in turn wholesale fuel prices – which could mean higher UK petrol and diesel prices.”

Speaking to i, Simon Williams, a spokesman for the car insurance firm noted that suppliers “have not passed on [to consumers] the savings in wholesale price”they have made in recent months as global markets have enjoyed an abundance of oil.

A “significant” cut in oil supply could well lead retailers to increase prices, he suggested.

RAC: Do not stock up on fuel

Asked whether motorists should consider buying and storing petrol or diesel now before the potential price rise, Mr Williams said: “That is not something we would ever recommend”.

He added that the amount by which fuel costs could rise would depend on the outcome of Friday's talks with Russia, which is not part of Opec but has been coordinating its output levels to support the market.

Video: Opec talks end without deal to curb supply (Bloomberg)

US President Donald Trump has publicly made clear his desire for Opec to refrain from reducing oil production. "Hopefully OPEC will be keeping oil flows as is, not restricted,” Mr Trump tweeted on Wednesday. “The World does not want to see, or need, higher oil prices!"

Additional reporting from PA


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