End of cheap petrol 'just weeks away' after oil barons agree on production freeze

Stock up while it lasts - petrol prices may start climbing again after oil giants came to an agreement to halt production. This is why it matters

Millions of British drivers face rising petrol prices after crisis talks between oil giants Saudi Arabia and Russia led to a freeze on output.

An unprecedented meeting behind closed doors between the two nations saw them agree to keep oil production to January levels in a bid to stop prices plummeting further.

The worldwide oil glut has seen the cost of a barrel plunge to a 12-year low of under $30 and analysts predicted it could crash to $20 as fierce rivalry between the oil producers saw no signs of a slow down.

But Tuesday's agreement in Doha, Qatar could mark the death of cheap petrol for UK car owners as motoring groups say the end of the 99.9p a litre bonanza is just weeks away.

Oil prices have already rallied from $30 to $34 a barrel and AA spokesman Paul Watters said: “The players in the oil market are seeking to address this glut so the roller coaster will start all over again.

“This has nothing to do with an oil shortage - it’s all about managing the price and drivers are always the victims when something like this happens.”

And Simon Williams, RAC spokesman added: “The £1 a litre petrol may disappear within weeks as we see a few more dollars added to the price of a barrel of oil.”

Saudi Oil Minister Ali al-Naimi admitted price was at the heart of the output freeze.

He said: “We don’t want significant gyrations in prices, we don’t want reduction in supply, we want to meet demand - we want a stable oil price.”

While oil ministers from Saudi, Russia, Qatar and Venezuela have agreed to the freeze rather than a cut in production, all eyes will be on Iran tomorrow (Wed) as it holds talks in Tehran with Iraq and other oil producing nations to state its position.

Until now it has vowed to pump a million barrels of oil a day as it is playing catch-up with rivals following the recent lifting of sanctions.

While the oil giants slug it out, there are fears that Britain’s 30 million drivers could be hit with a double whammy at the pumps as Chancellor George Osborne is eyeing up fuel duty to plug the budget deficit and balance his books by 2019.

Fuel tax has been frozen for four years but next month’s budget could see it rise in line with inflation and boost his coffers by £3 billion.

The RAC said: “We are very concerned that the Chancellor will increase fuel duty and are expecting the worst for the budget.”

Price of dollars in the parallel market will also fall as policy will be adjusted following the rise of our foreign reserve. This is the best time to start selling it off

The price rises but supply cuts, which means we may even record lower income. Also, the stability of the price would depend on the rise in the demand of crude oil else, if the production is continued, it may fall again. Finally, where's the cash for expensive petrol coming from?