Diesel prices could soar as high as £3 a litre and petrol could reach £2.40 if oil prices don’t stabilise, MPs have been told.
The Treasury Select Committee heard that the cost of fuel could almost double if sanctions led to supplies from Russia being cut off.
Dr Amrita Sen, director of research at Energy Aspects, cautioned against doomsaying but warned that further massive rises and even diesel rationing were “within the realms of possibility.
However, other industry observers have dismissed the claims as “far-fetched” as oil prices start to fall.
This week diesel hit an average of £1.73 per litre and petrol reached £1.63 - the highest ever recorded.
Prices are expected to fall in coming days after the wholesale price of oil slipped but Dr Sen and other experts have warned that this could be a “lull before the storm” of fresh rises.
Prices were already rising as producers struggled to meet growing global demand for oil but the war in Ukraine has caused uncertainty in the market. With many countries now banning the use of oil or fuels from Russia due to its attack on Ukraine, costs from other sources could rise.
Nathan Piper, head of oil and gas research at financial services company Investec, told the committee: "If more stringent actions are imposed upon Russia, and five million barrels a day is truly taken out of the market, then oil prices would really have no ceiling."
The UK imports around 8% of its oil but around 18% of its diesel from Russia.
Dr Sen said her group’s predictions were based on the cost of oil rising by 50%.
She told MPs: “If you do it on the basis of crude oil, we’re saying it could easily go up by 50%. Assuming no tax changes implemented by the government, [petrol] could end up being £2.40 per litre.”
Due to the volume of diesel used by industry, she said it would rise even further “to £2.50, even closer to £3. That’s definitely within the realms of possibility”.
She said that the UK could consider following Germany and rationing diesel supplies to industry in order to stockpile during summer and create a buffer for winter.
However, the RAC’s fuel spokesman Simon Williams said indications from the global market were that the situation was stabilising.
He said: “While the price of diesel has risen to record levels and may still continue to rise this week as earlier wholesale price hikes are passed on by retailers, claims that it will reach £3 a litre are far-fetched.
“The price of oil has stabilised and may in fact be starting to fall further leading to reductions in wholesale fuel which in turn should result in cheaper pump prices.”
Oil prices have more than doubled in little over a year, rising from $55 a barrel in January 2021 to a high of $139 in March 2022. However, they fell sharply to $102 last week as fears that the EU would ban Russia oil eased and there was speculation that extra supplies could be release by other major oil-producing nations.
It remains to be seen how much of this reduction will filter down to forecourts, with retailers notorious for a “rocket and feather” approach to pricing, with costs shooting up as soon as wholesale prices rise but taking far longer to come back down in response to falling production costs.