The oil crisis triggered by the invasion of Ukraine has led to record prices at the pumps, the cost of filling a family hatchback hitting a record £90.
And as some forecourts in London charged 219p for a litre of diesel – just short of £10 a gallon – experts warned the energy crisis could lead to a “global recession”.
On Monday, oil hit a 14-year high of $139 a barrel and, although it slipped to $125 today, experts fear it could yet increase to $240.
Research firm Rystad Energy said in the “worst-case scenario” there would be a shortfall of 4.3 million barrels of oil a day by the summer if more countries roll out sanctions on Russian oil exports.
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Bjornar Tonhaugen, head of oil markets at Rystad, said: “This is the largest energy crisis in decades and the impact on the world’s most important commodity is going to be unprecedented.
“Oil at $240 per barrel would trigger a global recession.”
The increase in fuel prices will squeeze already strained family budgets amid a cost of living crisis that could lead inflation to go from 5.5% to 8% this spring.
Communities and Local Government Secretary Robert Jenrick warned the country was facing “the most difficult economic year we’ve seen in my lifetime”.
RAC figures show diesel rose by 3p a litre, from 162.28p on Monday to 165.24p on Tuesday, the biggest daily increase in 22 years. Unleaded rose from 156.34p to 158.2p.
It means the cost of filling a 55-litre family motor with diesel has hit a record £90.88, up by £8 since January, while a tank of unleaded costs £87, up £7.
The RAC is warning car owners to brace themselves for more price rises, with unleaded expected to costs an average 160p a litre by the end of the week and diesel, 170p.
In some areas, drivers are already paying almost £2 a litre for diesel, with forecourts in parts of Dorset charging 193.9p, while unleaded is almost 18p a litre above the UK average at 175.9p.
And there were reports of garages in London charging 219p a litre for diesel.
Chancellor Rishi Sunak is under increasing pressure to follow Ireland’s lead to ease the burden on motorists by cutting tax on fuel.
Simon Williams, the RAC’s fuel spokesman, said: “Average fuel prices leapt to new records on Tuesday.
“Wholesale fuel prices have risen dramatically this week, so more pump price increases in the coming days are inevitable.
“Petrol is certain to top an average of £1.60 a litre this week while diesel will progress very quickly towards £1.70. We call on the Chancellor to help drivers by temporarily cutting VAT to at least 15%. As it stands, 26p a litre of what drivers are paying on the forecourt is attributable to VAT and that is on top of 58p a litre in fuel duty.
“This tax on a tax is causing unbelievable financial pain to drivers, which is why Mr Sunak holds the key to easing the burden.”
Ireland announced a tax cut of 20 cents (17p) a litre on petrol and 15 cents (13p) on diesel, cutting the cost of filling a family car by 12 euros (£10) for petrol and 9 euros (£7.52) for diesel.
The UK relies on Russia for 8% of its oil, but on Tuesday announced it would phase out the imports by the end of the year. Downing Street hinted that Boris Johnson could do a U-turn and end the UK’s ban on fracking to ease problems caused by the rising gas and oil prices.
But that would fly in the face of the Tories’ 2019 manifesto which promised: “We will not support fracking unless the science shows categorically that it can be done safely.”
A spokesman for the Prime Minister said: “The moratorium on fracking remains in place.
“But you would expect the Prime Minister to look at all options given what has happened in Ukraine, given the rising cost in oil and gas, the wholesale prices and the effect that is having in the UK.”
The International Energy Agency is in talks with member nations to release a stockpile of 60 million barrels of oil to help bring prices down.
Faith Birol, executive director, said: “We are coming up with a 10-point action plan to cut oil use in a hurry. In oil markets, the most difficult months are the summer months, the so-called ‘driving season’, when the demand goes up.”
Families are also facing rising grocery bills as the price of bread, cheese, baked beans, rice and cereal have all gone up in a year.
A 415g can of Heinz Beanz is £1, up from 85p, Kingsmill soft white medium sliced bread is up 8p at £1.03, and Tilda basmati rice (250g) has increased from £1.18 to £1.23.
With the energy price cap increasing from £1,277 to £1,971 on April 1 and predicted to reach £3,000 in October, millions of families face further hardship this year.
Food poverty campaigner Jack Monroe told MPs on the Work and Pensions Committee the cost of living crisis would hit kids hardest, and in some cases would be “fatal”.
She said: “A £20 a week food shop a few years ago gets probably about two thirds of what you’d be able to get for that £20 now.
“And that’s not people deciding not to go to the theatre or not have legs of lamb or bottles of champagne – that’s people deciding. ‘We won’t eat on Tuesday or Thursday this week’ or ‘We’ll turn the heating off’ or ‘We’ll skip meals’.”
