No relief in sight: Aussies could soon be paying $2.20 per litre for unleaded

The price of oil has soared to US$135 a barrel in recent days, meaning Aussie drivers could be paying more than $2.20 per litre at the pump in the coming weeks – and eventually as much as $2.50/L.

While Brent Crude has reversed some of those gains today, settling at around US$125/barrel at the time of writing, some technical analysts are suggesting it could be the beginning of an even greater rally to the upside.

Investment bank JP Morgan, which boldly predicted US$125/barrel back in December, is now saying Brent Crude could hit US$185/barrel by the year’s end, while another hedge fund is foreshadowing US$200/barrel, according to Yahoo!Finance.

Petrol prices hit an all-time high at the end of February, with a national average of $1.79/L reported. At the time, Brent Crude was priced at US$96.

This week also saw the average increase to $1.83/L according to the Australian Institute of Petroleum – a rise of 2.2 per cent from the February highs, but a far cry from the 39 per cent increase in oil over the same period.

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This has led some industry experts to warn the current prices could be as good as it gets for the foreseeable future.

“What we’re bracing ourselves for is averages of over $2 per litre,” the NRMA’s Peter Khoury told WhichCar.

“And unfortunately [the Ukraine conflict is] just going to keep pushing the price up. Now obviously there’s talk of sanctions on Russian oil, which will also impact oil prices further. They jumped significantly overnight, and there really isn’t any good news in store when you look at forecasts in the short-term,” Khoury warned.

“So $2 per litre is what we’re expecting at the high point of the next cycle (for the capital cities that have price cycles), and if the latest increase is passed on, that could go as high as $2.20 for regular unleaded – and that’s the average I’m talking about.”

Oil’s roar higher appears to be part of a wider rally in commodities, with metals such as aluminium, tin, lead, nickel, zinc, and copper all increasing dramatically, with expectations the move could eventually force hybrid and electric vehicle makers to pass on the increased costs.

“Right across the board there are obviously concerns about the impacts of these increasing prices” Khoury said.

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“Diesel’s the same – wholesale price of diesel is now more expensive than regular unleaded, which is uncommon, but it’s just a demonstration of the period of time that we’re in.”

Khoury says right now is the time to be filling up “because we are going to get a significant price shock at the bowser in the coming days,” and recommended Sydneysiders get the myNRMA app or use the State Government’s Fuel Check website to find the cheapest prices locally.