British motorists were warned to expect higher pump prices throughout 2018 as oil prices headed towards $70 a barrel for the first time in more than three years.
The RAC said a knock-on effect will likely push pump prices higher as the cost of wholesale fuel rises. Its Fuel Watch data showed oil prices were last over $70 a barrel on 3 December 2014, when they hit $70.22 a barrel.
Brent crude oil prices rose as high as $69.35 a barrel this afternoon as production cuts led by the Organisation of the Petroleum Exporting Countries (Opec) and strong demand helped bring the market into balance.
West Texas Intermediate, the US benchmark, rose to $63.77 a barrel.
The average price of petrol currently stands at 121.27p a litre while diesel sits at 123.97p, the RAC said, having risen from 2017 lows of 114.33p and 115.02p respectively.
In the last two months alone, petrol prices have risen nearly 5p a litre, and the RAC expects prices to rise further in 2018 if $70 a barrel oil becomes the new normal.
While the firm's two-week pump price forecast currently shows a "fairly static" picture, this could fast change if oil prices rise above $70 a barrel, the RAC said.
“Oil hitting $70 a barrel is potentially very bad for motorists who are already having to get used to paying 7p a litre more for petrol and 9p more for diesel than they did last July," said RAC fuel spokesman Simon Williams.
“If oil stays at this level, pump price hikes will be almost inevitable. With households across the country still feeling the cost of Christmas this is not the start to 2018 anyone would have wanted. It could also negatively affect business and further fuel inflation.”
However, the US's shale boom could be a saving grace.
Williams said: “Looking at the global oil picture it seems as if the glut of oil stocks is disappearing due to the production cuts imposed by Opec along with non-member Russia as the United States’ crude oil inventories have fallen for eight weeks in a row. The US is now producing far more from fracking but this isn’t filling the gap from the Opec cuts.
“If, however, the US’s fracking production increases substantially there is a hope that the price of oil may fall back and settle at the mid-$60 a barrel mark. This would, of course, be far better news for UK motorists.”