After fuel prices rose again over the weekend, the cost of filling up a family car has surpassed £100 for the first time ever.
The average 55-litre tank filled with diesel costs £100.42 and petrol is £95, said the AA.
Oil prices for Brent, the global benchmark, have soared in recent months due to Russia's invasion of Ukraine with industry insiders warning the 'worse is yet to come' as the price of a barrel of crude oil continues to rise.
Fuel prices have also spiked as soon as the economy reopened following the Coronavirus lockdown, prompting an increase in demand.
"With the cost of filling up now above £100, what had once been a 'dash for diesel' among UK car owners is rapidly becoming the death of diesel," Luke Bosdet, the AA's spokesman on pump prices told media.
Oil prices look set to rise further following the ban on Russian exports by the European Union, experts were predicting today.
“Europe will reduce two-thirds of its oil imports from Russia, which will reportedly cost Russia around US$10bn in lost revenue,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Of course, the news suggests that the inflation situation in Europe, and in the West, could get worse before it gets better.
“Even though we saw some easing in US inflation figures earlier this month, the relentless positive pressure on oil prices is very much worrying across the Atlantic as well,” said Ozkardeskaya.
“Even though oil advanced to levels that look interesting for selling a top, the positive pressure is too strong for betting on a downside correction in the short run.
“Shorting oil has become a risky bet, as following the European ban, there is a stronger case building for a further extension of the gains.”
How the Organization of the Petroleum Exporting Countries reacts is another area of uncertainty.
OPEC could choose to ramp up supply to replace oil exports from Europe, but this is unlikely.
“First, the OPEC sticks to its OPEC+ agreement since the beginning of the war in Ukraine, showing a solid support for Russia in this battle,” said Ozkardeskaya.
“Therefore, they won’t necessarily applaud the European decision to ban a partner’s oil. And second, the OPEC nations don’t necessarily have the capacity to replace the Russian oil, as they are already struggling to meet their own quotas."
High oil prices mixed with inflation spells bad news for many European businesses.
The Consumer Price Index hit a new record high of 8.1% in May putting the European Central Bank under greater pressure to tackle inflation.
“Surging inflation and oil prices will only exacerbate economic woes for businesses and households in the months ahead,” according to an analyst note from the City Index and Forex.
It expects European stocks will struggle against a background of surging oil prices and higher inflation, even if the ECB decides interest rates should rise.
Rising oil prices are also likely to put further pressure on household and business costs.
Inflation has been steadily rising in the past few months, from 7.4% in April, to 7.7% anticipated to May which jumped to an 8.1% realised year-on-year increase.
Fawad Razaqzada, market analyst at City Index and Forex, said: “I don’t think we will see sustained periods of intense buying like last year or years before. This time, inflation is the difference and central banks’ hands are tied.”
“It is worth watching European stocks and indices such as the DAX for potential weakness as worries about economic outlook intensify and ECB turns even more hawkish,” the analyst note said.
Brent Crude rose to a daily high of $124.08 per barrel today but has since dropped back down to $119.55.