Cost of living: Fuel prices could rise again as oil-producing states ponder output cut
There is a mounting risk that fuel prices could soon begin to rise again as major oil-producing countries ponder a big cut in output.
The Opec+ cartel, which includes Saudi Arabia and Russia among its main members, is expected by markets to reveal this week a collective target to reduce delivery by more than one million barrels per day.
The price of Brent Crude, which rose 4% on Monday in anticipation of such a cut, was up further during Tuesday’s trading – to just over $90 per barrel.
Follow live updates on the cost of living crisis
Opec+ is responding to weaker demand for oil globally as economies tackle high inflation though there is pressure from the West to maintain supply to help tame the pace of price rises.
While the current Brent price remains far below the early Russia-Ukraine war highs of above $120 per barrel, the recent weakness of the pound would be expected to contribute to pressure on UK pump prices, potentially adding to the cost of living crisis again according to motoring organisation the RAC.
That is because wholesale fuel, like oil, is traded in dollars.
‘Further pain at UK pumps’
RAC fuel spokesman Simon Williams told Sky News: “The extent of the (Opec+) cuts will be crucial, as will compliance from member countries throughout October.
“But one thing’s for sure, it’s likely to cause further pain for drivers at the pumps in the UK, particularly with the pound so weak against the dollar.
“If the cost of a barrel were to climb back up to $100, drivers at the current exchange rate would very soon see forecourts displaying prices around 175p a litre again, which is 12p more than the current UK average.”
Please use Chrome browser for a more accessible video player
How rising costs will affect you
Average pump prices are currently 163p for unleaded and 180p for diesel – the latter remaining higher because of the loss of Russian supplies.
The pound was infinitely higher in value versus the US currency, around the $1.25 level, when petrol and diesel costs were hitting record levels daily in the spring following the Russian invasion.
It slumped to an all-time low of $1.03 last week in the wake of the government’s mini-budget when financial markets balked at the volume of giveaways and level of borrowing required to fund the growth programme.
How the markets are performing
It had recovered to $1.14 by Tuesday morning in choppy trading. That has been credited to government U-turns since Kwasi Kwarteng’s statement to the Commons and a weakening in the historic level of dollar strength.
The reason cited for the weakening was data suggesting the US economy was slowing faster than expected, raising the prospect of a pause to sharp US interest rate hikes.
Stock markets also recovered some poise as investors left the safety of the dollar, with the FTSE 100 putting on 2%.
The more domestically-focused FTSE 250 was 2.6% higher.
Energy and commodity stocks were among those to enjoy the best gains as prices recovered from their recent recession -induced slump.
Opec sources told the Reuters news agency that voluntary output cuts by individual members could come on top of the group production reductions.
That being the case, it would amount to the largest output reduction since the start of the COVID pandemic in early 2020.
However, there were signs that the markets were yet to fully shrug off the fallout from the mini-budget that saw UK borrowing costs soar.
There were clear concerns around the UK’s credibility when the government raised £2.5bn on the bond markets.
The 0.5% of the 2061 (40-year) gilt on offer was sold at an average yield of 3.371%.
While that was the highest yield for any gilt sold at auction since 2014, it came in below that for a 30-year green bond syndicated last week.
It drew bids worth 1.97 times the volume on offer – the lowest bid-to-cover ratio since March.
An arms race for artificial intelligence (AI) supremacy, triggered by recent panic over Chinese chatbot DeepSeek, risks amplifying the existential dangers of superintelligence, according to one of the “godfathers” of AI.
Canadian machine learning pioneer Yoshua Bengio, author of the first International AI Safety Report to be presented at an international AI summit in Paris next week, warns unchecked investment in computational power for AI without oversight is dangerous.
“The effort is going into who’s going to win the race, rather than how do we make sure we are not going to build something that blows up in our face,” Mr Bengio says.
He warns that military and economic races “result in cutting corners on ethics, cutting corners on responsibility and on safety. It’s unavoidable”.
Mr Bengio worked on neural networks and machine learning, the software architecture that underpins modern AI models.
He is in London, along with other AI pioneers to receive the Queen Elizabeth Prize for Engineering, the most prestigious global award for engineering, in recognition of AI and its potential.
He’s enthusiastic about its benefits for society, but the pivot away from AI regulation by Donald Trump‘s White House and frantic competition among big tech companies for more powerful AI models is a worrying shift.
‘Superhuman systems becoming more powerful’
“We are building systems that are more and more powerful; becoming superhuman in some dimensions,” he says.
“As these systems become more powerful, they also become extraordinarily more valuable, economically speaking.
“So the magnitude of, ‘wow, this is going to make me a lot of money’ is motivating a lot of people. And of course, when you want to sell products, you don’t want to talk about the risks.”
But not all the “godfathers” of AI are so concerned.
Take Yann LeCun, Meta’s chief AI scientist, also in London to share in the QEPrize.
Yann LeCun, Meta’s Chief AI scientist
“We have been deluded into thinking that large language models are intelligent, but really, they’re not,” he says.
“We don’t have machines that are nearly as smart as a house cat, in terms of understanding the physical world.”
Within three to five years, Mr LeCun predicts, AI will have some aspects of human-level intelligence. Robots, for example, that can perform tasks they’ve not been programmed or trained to do.
Read more:
What is DeepSeek? The low-cost Chinese AI firm that has turned the tech world upside down
Bill Gates says he would be diagnosed with autism if he was young today
But, he argues, rather than make the world less safe, open-source AI models such as DeepSeek – a chatbot developed by a Chinese company that rivals the best of America’s big tech with a tenth of the computing power – demonstrates no one will dominate for long.
“If the US decides to clam up when it comes to AI for geopolitical reasons, or, commercial reasons, then you’ll have innovation someplace else in the world. DeepSeek showed that,” he says.
The Queen Elizabeth Prize for Engineering prize is awarded each year to engineers whose discoveries have, or promise to have, the greatest impact on the world.
Previous recipients include the pioneers of photovoltaic cells in solar panels, wind turbine technology and neodymium magnets found in hard drives, and electric motors.
Science minister Lord Vallance, who chairs the QEPrize foundation, says he is alert to the potential risks of AI.
Organisations such as the UK’s new AI Safety Institute are designed to foresee and prevent the potential harms AI “human-like” intelligence might bring.
Science minister Lord Vallance
But he is less concerned about one nation or company having a monopoly on AI.
“I think what we’ve seen in the last few weeks is it’s much more likely that we’re going to have many companies in this space, and the idea of single-point dominance is rather unlikely,” he says.
The Treasury Select Committee has sent a formal notice to HM Revenue & Customs demanding answers to critical questions about how it has been enforcing trade sanctions on Russia, following a Sky News investigation into the government department.
Last month Sky News reported that while HMRC had issued six fines in relation to sanction-breaking since 2022, it would not name the firms sanctioned or provide any further detail on what they did wrong. HMRC also admitted it had no idea how many investigations it was currently carrying out into sanction-breaking.
The admissions raised questions about the robustness of Britain’s trade sanctions regime, described by government ministers as the toughest in British history.
Money blog: Now we know why Guinness tastes worse in the UK
Please use Chrome browser for a more accessible video player
How robust are UK-Russia sanctions?
While the UK has introduced rules preventing the export of certain goods to Russia, banned items are still flowing into the country via third countries in the Caucasus and Central Asia. Some suspect that part of the reason these flows continue is that HMRC is not enforcing the rules as robustly as it could be.
Following Sky News’ investigation, the chair of the Treasury Select Committee (TSC), Dame Meg Hiller, has written a letter to the chief executive of HMRC, Sir Jim Harra, with 10 questions about HMRC’s conduct in the enforcement of sanctions.
Among the questions, the TSC chair asks: “Why doesn’t HMRC publish information on breaches in sanctions in a similar way to the Office for Financial Sanctions Implementation (OFSI), which gives the details of the company, how it breached sanctions and the amount of penalty issued?”
Many other countries around the world – most notably the United States – routinely “name and shame” those who break sanctions, in part as a deterrent and in part to inform other businesses about what it takes to break the rules. But HMRC instead protects the privacy of those who break sanctions.
The TSC has been scrutinising the sanctions regime in recent months, examining loopholes in the legislation and its enforcement. HMRC has been asked to respond to the letter by 17 February.
Business
Millions face council tax rise of more than 5% after government gives green light to bigger hikes
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports10 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway