Brent crude price slumps, but diesel prices are expected to rise further amid Ukraine war

Brent crude price slumps, but diesel prices are expected to rise further amid Ukraine war

15 March 2022 | Kasia Parda | 12 min read

The light and sweet nature of Brent Crude makes it ideal for refining into diesel, petrol, and other end products. About two-thirds of the world's traded crude oil is priced using Brent Crude, making it one of the most influential benchmarks for oil.

Following Russia's invasion of Ukraine, the world's plans to either boycott or reduce reliance on Russian energy caused oil prices to rise to almost $140 a barrel last week. By the end of the week, the price had slid back to around $120 dollars, and oil is now trading at less than $110 dollars a barrel. 

Brent crude has fallen but analysts warn that more diesel price hikes are to come

Despite the recent drop in Brent crude, market analysts predict further price hikes in the near future, including diesel reaching an eye-watering £3 per litre.

On Monday (March 14), Brent crude price fell by 8% to trade at $103.68 per barrel, but Treasury Committee members were warned this is just a "lull before the storm". Nathan Piper, head of oil and gas research at financial services company Investec, warned against “continued increases in fuel prices”. In his words: “If more stringent actions are imposed upon Russia, and five million barrels a day is truly taken out of the market, then oil prices would really have no ceiling.”

Diesel is particularly vulnerable to price increases, as a third of the UK's imports are from Russia

The director of research at Energy Aspects, Dr Amrita Sen, said that petrol prices could rise to around £2.40 a litre and diesel prices between £2.50 and £3 are definitely possible. In addition, she noted that the UK could follow Germany in imposing rationing measures, which have already seen BP and Shell cut diesel wholesales to industry. During the committee hearing, she said: “If we need to rebuild stocks over the summer so that we have a buffer over the winter… it is industry that will need to be curtailed and that's where the first set of rationing will have to come in.” Piper said the government's only other option was to release some of its petrol and crude oil stockpiles. “But it'll be industry that takes the brunt of any rationing initially,” he added.

As a result of Russia's invasion of Ukraine, oil prices worldwide have risen to record levels, with record prices being recorded at the pumps every day

Petrol reached a new record price of 163.46p on Sunday (March 13), up 2.5p from Thursday (March 10). Meanwhile, diesel climbed to yet another record high of 173.67p on Saturday (March 12), up 3.5p from two days earlier.

Simon Williams, RAC fuels spokesman, said: “The price hikes seen over the weekend are still a result of the oil price rise which began at the start of the month and peaked early last week at $137 a barrel". “As the oil price has now fallen back, we should hopefully reach the peak and start to see prices going the other way to reflect the big drop in wholesale costs seen at the end of last week, subject to no further spikes in the barrel price this week.”

FleetCheck's managing director, Peter Golding, says fleets need a strategy, as it appears the conflict will not be resolved quickly. “The terrible situation in Ukraine is something that is playing on all of our minds and I think most people believe it could sadly persist for months or even years," he added. “While it is not a major issue compared to the loss of life we are seeing, it is clear that fuel costs are rising to record levels quickly and substantially, and are unlikely to normalise any time soon. This is currently adding substantially to fleet costs on an almost day-by-day basis."

FleetCheck comes up with a five-point plan to help fleets with fuel costs

"While it is probably not possible to completely offset the impacts of the price rises we are seeing, taking greater control over costs is very much achievable."  explained peter Golding. “The plan was actually created in response to the initial spikes in fuel prices that we saw in the autumn caused by shortages – and so we know it works from the experiences of fleets that have adopted it – but it is even more pertinent today.”

In his remarks, Golding noted that although the plan had been largely written for petrol and diesel cars and vans, its principles applied almost equally to many electric vehicles being added to fleets today. “While fuelling EVs represents a fraction of the cost of an ICE vehicle, there will still be substantial percentage price increases in energy very soon - and working to minimise the effects of these rises is very much part of fleet management best practice.”

Your company may save thousands of pounds a year by counting every penny when filling up fleet vehicles

1. Promote more economical driving by asking your fleet drivers to accelerate and brake gently, paying attention to what is happening ahead of them. Change up early and don't go over the speed limit but rather stay below. According to the AA, if you drive 70mph, you'll use 9% more fuel than if you drove 60mph, and 15% more if you drove 50mph.

2. Provide drivers with tips on how to prepare their vehicles. Some simple steps can significantly reduce fuel consumption. Remove roof racks or other heavy items from vehicles if they're not needed. Use power-consuming features like air conditioning or rear window demisting only when necessary. Check tyre pressure as it can have a significant impact. Don't leave the vehicle running before you use it.

3. Measure fuel use. It is not uncommon for fleets not to know how much fuel they use per driver, per vehicle and overall. Buying fuel through special fuel cards is a simple way to monitor fuel usage. The data is compiled into software reports that will help you determine how much fuel you use.

4. Review your fuel consumption data. You can analyse your fuel consumption data using fleet software. This will allow you to identify drivers and vehicles that are not performing to your expectations when it comes to fuel consumption.

5. Don't hesitate to challenge employees. Real-world fuel economy is affected most by driver's behaviour. Fuel economy can differ by more than 30% between drivers in identical vehicles travelling similar routes. Inform drivers that they are being monitored, especially if you are using telematics, and offer them help and advice if they are using excessive fuel.

Fuel prices cause EV interest in the UK to soar by 37%

New data shows that interest in electric vehicles has increased by 37 per cent in the past week, following record high petrol prices. According to research, 150% more drivers look for electric cars and electric vans than the same week last year. Furthermore, configured searches reveal that 51% more UK drivers consider a specific EV make and model. Certainly, buyers are looking for long-range electric vehicles since electricity prices are going up in April as well.

With the current average price for a litre of fuel in the UK, a full 55-litre tank of petrol costs £88.58 and £93.54 for diesel. The cost of filling up a large SUV can reach as high as £129 and even more for a commercial van in areas with the highest fuel prices. The record rises in fuel prices have many motorists wondering when they will ever stop, while others are taking action and looking for alternatives to mitigate the impact rising petrol prices have on their household budgets.  According to research, the cost is a key factor for two out of three motorists when deciding whether to go electric. 

According to official figures, 1 in 6 new cars registered in the UK in 2021 was an electric or plug-in hybrid, up from 1 in 10 the year before. A variety of factors have contributed to this, including the availability of more EV models in showrooms, lower purchase prices, longer battery ranges, and more charging points across the country.

Motorists who planned to buy or lease an EV at some point in the future are now looking to switch sooner rather than later in response to the increasing fuel costs. What's more, drivers who weren't even thinking about it before are now contacting us and asking for our best electric car leasing deals. Many of our current customers are renewing their diesel van leases with electric vans, and new customers enquire about our affordable electric van lease deals. Even with the increasing electricity prices, electric cars and electric vans are still cheaper to run and maintain than petrol and diesel ones.

 

First, the pandemic and now the ongoing crisis in Ukraine has caused price hikes affecting all aspects of our lives. It is only natural that people search for ways to cut costs, and we certainly are capable of helping you by offering our discounted lease deals on electric cars and vans. Currently, we offer very affordable deals on the all-new Vauxhall Mokka-e and VW ID.3 as well as great electric van leasing deals on the Maxus eDeliver 3,  Vauxhall e-Combo, and the Peugeot e-Partner. Check all of our EV deals below or contact us if you need any help.

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