Price of Oil Hits Eight-Year High | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.

Advertisement

Michael Brown

Content Writer
Published: 24/02/2022

Potential sanctions on Russia could affect Europe’s energy supply.

The price of oil rose to $103 a barrel this morning after Russian President Vladimir Putin ordered a military invasion of Ukraine.

This is the highest price since 2014, when Russia annexed Crimea. Since the beginning of the year, oil prices have increased by more than $20 a barrel.

“As military action escalates, we can now expect a steady trickle of further sanctions throughout the day, which will have ramifications across the markets,” said Giles Coghlan, Chief Analyst at HYCM.

However, there is an immediate concern that the current events will impact Europe’s supply of oil and gas.

“Just yesterday, the Bank of England’s Governor, Andrew Bailey, stated that there is an upside risk to energy prices from the invasion,” confirmed Coghlan.  

According to Reuters, Russia is the world’s second-largest oil producer and makes up 35% of Europe’s energy supply.

If tough sanctions were imposed on Russia, there are fears it would cut off Europe’s access to its oil and gas.

For the UK, this potential impact is not expected to be as severe on its gas supply when compared to European neighbours. This is because over 80% of Britain’s gas is sourced from the North Sea or imported from Norway, according to the Guardian.

Instead, the price of gas will likely become the UK’s biggest problem if markets rise in Europe, the article stated.

The conflict has also impacted other commodities, with gold’s value increasing over the past month as tensions deepened.

What do rising oil prices mean for me?

Higher oil prices come as bad news for the consumer due to its direct impact on increasing inflation. And with inflation already at a 30-year high, this will ultimately stretch consumers’ wallets further.

In addition to the cost of living, a rise in oil prices will have an immediate effect on transportation and heating. This means you can expect to also pay more at the petrol pump and for your heating at home.  

Therefore, war between Russia and Ukraine might push more people into fuel poverty, a term used for people who cannot afford to keep warm at home, according to Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown.

“Millions of people have fallen into the fuel poverty gap, and war between Ukraine and Russia could push even more of us over the edge,” she explained.

Currently, it would now take a £258 cut in fuel bills for someone to escape fuel poverty.

“This is even before the full impact of April’s price hike has fed through into the calculations – let alone the risk of war pushing prices up significantly again in October,” said Coles.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy