The sharp rise in oil prices caused by the conflict in the Middle East has eased further. A barrel of Brent crude was trading this morning at $88, after peaking at around $118 on Monday and about $3 less than yesterday at the same time.
However, the price still remains $18 higher since the beginning of the war, and these declines do not signal any possible reduction in fuel costs in the United Kingdom anytime soon.
The problem lies in the tightening of supplies for both crude oil and refined products, as a result of the closure of the Strait of Hormuz near the Iranian coast, writes Sky News.
This means that if you import most of your diesel, as the United Kingdom currently does, international competition for this supply will become more intense as long as the key maritime route remains closed.
The same rule also applies to natural gas costs in Britain.
They have increased by 2% today and 50% this month, despite the fact that their fate is usually closely linked to that of oil.
The reason why oil futures are declining is the hope that the International Energy Agency (IEA) will help fill the shortages by overseeing the largest release of global oil reserves in its history.
The size of this proposal to use reserves from member states, including the United Kingdom, has not yet been disclosed or approved.
