Gas prices soar to 18 times the level seen a year ago, threatening a deeper crisis in the cost of living Business News

Oil, gas and food prices jumped again on Monday on fears of Western sanctions on Russia’s energy exports that could deepen the cost of living crisis.

Gas prices in Europe have reached just over 800p per therm, an 18-fold increase in just one year. Oil briefly hit its all-time high, with Brent crude briefly hitting $139 a barrel before falling back to $125.

Higher prices will drive up energy bills and fuel costs even further than expected, and mean that a wide range of goods will be more expensive, significantly dampening living standards and economic growth.

Figures from data firm Experian Catalist show average UK petrol prices hit 155.62p, while the price of diesel hit a record high of 161.28p.

Rising oil and gas prices will also bring billions of dollars in additional revenue to the Kremlin, which depends on energy exports for much of its revenue.

Markets are now pricing in the prospect of much tougher sanctions on Russia, after Vladimir Putin stepped up his bombardment of Ukrainian cities, with some experts saying an official embargo in one form or another is now ‘just a matter of time”.

Russian oil is, in practice, already facing a partial embargo as some buyers refuse to buy it, fearing it will face sanctions when it arrives. Russia’s main oil benchmark, Urals crude, is now trading at nearly $30 a barrel against Brent.

(PA graphics)

So far, world leaders have refrained from an official embargo, believing that the economic costs – especially for Europe – would be too great.

About a quarter of the EU’s oil imports and around 46% of its gas came from Russia in the first part of last year, according to official statistics body Eurostat.

The UK is less dependent on direct imports from Russia for oil and gas, but prices are set internationally, meaning a disruption in supplies would impact Britain.

There is no quick way to replace the 5 million barrels per day that Russia exports to world markets, which means oil prices are likely to rise to the point where a significant number of buyers can no longer afford to pay. ‘to buy.

Oil cartel Opec decided last week not to increase production levels beyond what had already been announced.

European leaders are weighing the prospect of more economic hardship against the risk of not acting tougher on Mr Putin.

Former Foreign Secretary Sir Alan Duncan has warned that the UK risks sliding into a “dystopian economic collapse” if Russian energy imports are further disrupted.

The Tory MP, who has also worked as an energy trader, said ‘we need to pull the emergency cord’ in order to maintain gas supplies across Europe, warning the UK government to be careful ‘not to not punish us”.

French Finance Minister Bruno Le Maire said his government was working on assessing the risks associated with the Russian gas cut.

US Secretary of State Antony Blinken said a ban on Russian oil imports was being “very actively discussed”, but sanctions on natural gas would be much less likely.

Neil Wilson, Chief Market Analyst at, said: “It was only a matter of time before we got to the point of banning Russian oil and gas due to the escalation of conflict and targeting of civilians. Or at least got to the point of talking about it.

Volatile oil prices and gloomy economic forecasts sparked a selloff in corporate stocks that saw the FTSE 100 index fall 1.7% on Monday morning. The falls were reflected across Europe where Germany’s Dax fell 3.5% and France’s Cac 40 3.2%.

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This notice was published: 2022-03-07 15:48:03

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