Gasoline prices in the UK and the EU have risen to new highs as the Russia-Ukraine crisis continues to hit oil prices, threatening to further push up heating bills in Europe.
Most Five Eyes countries, several European nations, and Japan on Feb. 22 hit Russia with new sanctions for ordering troops into two separatist regions of Donetsk and Lugansk in eastern Ukraine.
The UK said it was preparing to impose further economic sanctions that would target more Russian banks and individuals, as well as companies in the energy, defense, technology, and chemical sectors in the event of further invasion into Ukraine.
Russia is the world’s second-largest oil exporter after Saudi Arabia and is the world’s top producer of liquified natural gas (LNG).
“Well, welcome to the brave new world where Europeans are very soon going to pay €2,000 for 1,000 cubic meters of natural gas!” Dmitry Medvedev, Russia’s former president and now deputy chairman of its Security Council, said on Twitter.
The UK only gets 6 percent of its crude oil and 5 percent of its natural gas from Russia, but sanctions could constrict global supplies, driving up fossil fuel prices worldwide.UK diesel prices have also risen, hitting 152.68p a liter on Feb. 23.
Oil and wholesale natural gas prices jumped after the Kremlin sent troops into two separatist-held regions in Ukrainian this week to “maintain peace.”
The price of Brent crude oil, an international benchmark, hit a seven-year high of more than $99 (£73) on Feb. 22 before falling back the following day.Energy prices in the UK are likely to rise to 70 percent in the first three months of 2022, according to Bank of England governor Andrew Bailey.
“If you look at the increase in energy bills this year, it is just about twice as big as any single year in the 1970s—it is enormous,” Ben Broadbent, the Bank’s deputy governor.UK inflation currently stands at 5.5 percent at its highest level in 30 years, of which energy prices accounted for nearly half of that, said Jonathan Haskel, a member of the Bank of England’s Monetary Policy Committee.
The Bank of England expects inflation to hit 7 percent by Spring when the price cap on household energy bills is to be raised in April, far above the Bank’s 2 percent target.
Many UK consumers were already paying high prices for energy and fuel, with demand surging following the easing of pandemic restrictions, but that figure could easily double if wholesale gas prices spiral further out of control following international sanctions on Russia.British households may see their energy bills soar by another $813.28 (£600) later this year as a result of the conflict, after prices were already poised to climb by more than $406.64 (£300) in October prior to the Russian intervention in Ukraine.
The gas price spikes are dramatically pushing up the cost of living in Britain, while wages are lagging behind.
Consumers worldwide are also being squeezed by rising prices on goods as companies pass down the higher costs of fuel, shipping, and wages due to supply constraints.
Global stock markets climbed on Feb. 23 before falling back again at closing after a volatile trading session the previous day due to the announcement of sanctions.
The UK’s FTSE 100 was flat, while France’s CAC-40 and Germany’s Dax had lost between 0.2 and 0.5 percent, while the main three US indexes were all in the red.
