Paul Holland, managing director for UK fuel at Allstar parent Fleetcor, explores the moving situation in Ukraine and Russia and what it means for fuel pricing.

Paul Holland, managing director for UK fuel at Fleetcor

Every day seems to bring new news about Russia and Ukraine. On 16 of February it seemed that the conflict was winding down; by the 17 7,000 more troops had been sent to the contested border. As the world’s second largest oil producer, pumping out 9.8 million barrels per day, anything that effects the Russian Federation will have significant impacts on the price of oil, and ultimately the price you’ll pay at the pump.

The ongoing situation has already had significant effects on the price of fuel. Although the conflict isn’t the only factor, in the last six weeks the price of a barrel of oil has increased by around 20%, from $77 to $94. If we see a full-scale war, possibly followed by sanctions on Russia, then two factors are going to come into play.

The first is the immediate drop in global oil supply, which will increase prices. What happens next might exacerbate this: sanctions could force countries to choose sides, and major exporters like China could make decisions that would cause further volatility.

Of course, if the situation deescalates then we will see the opposite. The price premium on fuel that is currently sitting at 20% could fall rapidly as the market returns to its ‘natural’ level.

Does that mean that the moment Putin and Zelensky shake hands we can breathe a sigh of relief? Perhaps, but we might find the drop in prices at the pump underwhelming.

There are more factors that affect what you and your fleet pay for fuel than geopolitics: taxes on fuel increased by two pence per litre in January, and there have been concerns about retailers ‘profiteering’ from current events (though the truth is more complicated).

Like the global fuel market, we are watching events with great interest, but however the current situation resolves itself we will be working to support our customers.