GLOBAL CRUDE OIL prices spiked to their highest levels since 2008 this morning, heightening pressure on the Government to move to cut excise duty on petrol and diesel.
The price of a barrel of Brent Crude — the European and international benchmark for oil pricing — for delivery in May briefly hit $140 a barrel in early trade, following comments by US Secretary of State Anthony Blinken.
It had fallen back down to around $125 a barrel at the time of writing.
European natural gas prices have also been hit by speculation that the flow of gas from Russia could be curbed. Benchmark Dutch TTF gas futures briefly hitting an all-time high of €345 per megawatt-hour.
Speaking yesterday, Blinken said the US could look to put an embargo on imports of Russian oil in response to the war in Ukraine.
Blinken said Sunday that Washington was in “active discussions” with European nations about banning Russian oil imports as a further economic penalty against Moscow, although he stopped short of announcing an outright boycott.
Although energy products are exempt from sanctions, European and US companies are already buying less oil from Russia, which is intensifying pressure on the supply of crude from alternative sources.
This is had led to sharp price increases in the fortnight since the invasion with markets also anticipating that Russia could stop supplying oil to Europe in retaliation for sanctions.
While it takes up to eight weeks for increases in wholesale oil prices to trickle down to consumers in the form of higher petrol and diesel costs, prices in Irish forecourts have already risen sharply in the past 12 months as the economy reopened and demand returned.
Petrol and diesel prices rose by almost 30% and 32% in the year to the end of January, according to the Central Statistics Office.
Amid heightened concern about increases in the cost of living in Ireland, Tánaiste Leo Varadkar signalled on Friday that the Government will intervene on costs before the budget in October.
Senior Government sources have told The Journal that while nothing is signed off on yet, a cut to the excise duty on a litre of petrol or diesel could be on the cards in the short run.
“I would think in the next week or so,” said one senior source.
About 60% of pump prices are due to tax, including VAT and carbon tax, according to figures from the AA.
In Europe — which relies on Russia for about 27% of its supply of oil and 40% of its natural gas — reaction to Secretary Blinken’s comments have been mixed.
Germany’s finance and foreign ministers cautioned Sunday against banning Russian energy imports.
The country’s foreign minister Annalena Baerbock said such a move would be pointless since it could not be sustained long term.
“It’s no use if in three weeks we find out that we only have a few days of electricity left in Germany and therefore we have to go back on these sanctions,” she told a German public broadcaster.
In a separate interview, she added that Germany was prepared “to pay a very, very high economic price” but “if tomorrow in Germany or Europe the lights go out, it’s not going to stop the tanks”.
Germany is heavily dependent on Russian fossil fuels, importing an estimated 55% of its gas and 42% of its oil and coal.
German Finance Minister Christian Lindner was also sceptical of an oil ban.
“We should not limit our ability to sustain ourselves,” he told the newspaper Bild.
— Additional reporting by Ian Curran & Christina Finn
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