Red diesel prices rise as oil price strengthens

A rise in the value of crude oil caused red diesel prices to jump about 3p/litre over the past week, says Oxfordshire fuel distributors Ackerman & Niece.

As Farmers Weekly went to press on Wednesday (25 March) spot brent crude had climbed to $52.80 a barrel, up from $43 a barrel a fortnight earlier. Red diesel prices strengthened from about 37p/litre to just over 40p/litre in response.

Ackerman’s Nick Adamson said they could rise further. “I don’t think we’ll get back up to the highs of last year, but I wouldn’t be surprised if prices stayed in the 40-50p/litre range for this summer. That’s a similar level to before Christmas.”

Crude oil – and hence red diesel – prices were tracking the stock market, which had recovered slightly over recent days. On top of that OPEC was also trying to get the price back up, he said. “It’s not clear whether the various economic recovery packages announced will work. But if they do industrial demand is expected to rise, which in turn puts upward pressure on prices.”

A $10 a barrel rise in crude oil prices generally translated into a 4-5p/litre increase on red diesel, although the weak value of sterling against the dollar had exacerbated price fluctuations, Mr Adamson said. “When the pound was at its weakest of $1.40, there was a 10p/litre difference [in diesel prices] compared with rates of $2 to the pound. That’s a difference of 25%, just down to the exchange rate.”

But the pound had strengthened slightly at the beginning of this week. On Wednesday £1 was worth $1.45610 and €1.07820.