Last week’s welcome drop in fuel price proved to be short lived. The market made significant gains in the first half of the week, breaking $120 a barrel by close of business on Wednesday.
Prices gained momentum due to disruptions to Russia and Kazakh’s crude exports via the Caspian Consortium Pipeline (CPC) which added to an already grim outlook for global oil supply. The CPC pipeline is considered a strategic supply line for global markets, fulfilling around 1.2% of global demand and 1.2m barrels per day of Kazakhstan’s main crude oil grade.
This exacerbated the current geo-political situation and macro-economic impact of the heavy sanctions recently placed on Russia following its invasion of Ukraine. This means that the oil market remains extremely sensitive to further upward price movements.
However, there was some good news from the Chancellor Rishi Sunak’s spring statement. Fuel duty will be reduced by 5ppl effective from 6pm on Wednesday 23rd March, which will help to reduce the fuel bills of businesses using oil co-branded fuel cards. Unfortunately, it is unlikely to make a significant long-lasting impact. As the price of fuel rallies, we will see the duty cut be quickly swallowed up in the rising cost of oil.
