Global oil prices have surged to the highest level in more than 10 months amid predictions of shorter supplies.
Brent crude, a benchmark for prices, rose above $95 per barrel on Tuesday.
It came as the International Energy Agency (IEA) said a decision by Saudi Arabia and Russia to cut production could cause a “significant supply shortfall” by the end of this year.
The IEA warned higher oil prices could lead could add to inflation problems seen across the world.
Following Russia’s invasion of Ukraine in February 2022, oil prices soared, hitting more than $120 a barrel in June last year.
They fell back to a little above $70 a barrel in May this year, but have steadily risen since then as producers have tried to restrict output to support the market.
Saudi Arabia and Russia, members of the Opec+ group and two of the world’s largest oil producing nations, decided to reduce production earlier in August.
As the biggest exporter and the leader of the pack, Saudi Arabia wants oil prices to stay elevated to make sure it has a steady stream of income while it tries to diversify its economy.
However, the West has accused Opec, whose members regularly meet to agree on production levels, of manipulating prices.
Analysts warn rising global oil prices could impact inflation – the rate at which prices rise – in many countries. Inflation soared in 2022 and has only recently started to come down.
“The symbolically important $100 [a barrel of oil] mark is now being considered once more,” said Sophie Lund-Yates, lead equity analyst at investment firm Hargreaves Lansdown.
“This is a difficult development, with fuel accounting for a significant portion of overall inflation.”
The latest inflation figure for the UK will be released by the Office for National Statistics (ONS) on Wednesday. Inflation has fallen in recent months but remains high at 6.8%.
Over the last few years households have been hit by higher fuel and energy bills, while businesses have put up prices to cope with rising costs
Petrol and diesel prices have jumped in recent months, and further rises could lie ahead due to crude oil being the main component of fuel, motoring groups say.
A recent fall in the pound may have made fuel even more expensive. As well as supply and demand, oil prices are also affected by the exchange rate between the pound and dollar, as Brent crude is traded in dollars.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman defended Opec+’s moves to restrict supply on Monday, saying energy markets needed light-handed regulation to limit volatility,
