Petrol prices hit £1 a litre

THE price of petrol has smashed through the £1 a litre barrier. Garages in central London are today charging as much as £1.12 for a litre of super unleaded as world oil prices soared following the weekend terrorist attack in Saudi Arabia.

Retailers warned drivers to be prepared for further increases over the summer when the latest rises in the oil price feed through to the pumps.

Ray Holloway, director of the Petrol Retailers Association, said: 'Price rises now are the result of the rise in crude prices in May and it's clear that this summer is going to be a very difficult one.

'The present Saudi situation is merely adding to what was already going to be a difficult year.'

The most expensive petrol in Britain is being sold at a Total garage off Sloane Avenue in Chelsea. It is charging £1.12 for super unleaded and 99.9p for a litre of unleaded.

Chelsea resident Carmen Crewe, who was filling up at the garage, said: 'Nearly a pound a litre is pretty outrageous and seems very, very dear. I have friends who came over from the United States who were absolutely flabbergasted by the price of petrol here - and these are people who have their own private jet.'

A number of other garages in London have increased lifted their prices to close to £1 a litre for the more expensive version of unleaded.

Although prices generally around Britain are much lower, at about 82p to 83p a litre, another round of rises pushing the average price towards 90p a litre is seen as almost certain later this month. This time last year a litre of petrol was being sold for an average of 76.5p.

The warning came as oil prices surged by about 3% this morning, with traders reacting nervously to the attack by suspected al Qaeda terrorists in the Saudi oil city of Khobar on Sunday.

US light crude rose $1.12 to around $41 (£22) a barrel while London brent crude was up by $1.42 to $38.02 a barrel.

'This is the worst escalation in terrorism in Saudi Arabia we've seen. It shows these guys are serious and will attack again,' said London energy analyst Geoff Pyne.

Saudi Arabia is the world's biggest oil producer and by far the largest exporter so any interruption to production would have huge implications for the cost of oil in the rest of the world. The country is desperate to ensure that its oil producing facilities, responsible for almost the entire wealth of the super-rich nation, do not fall victim to terrorists.

Although the unrest has not had any notable impact on the supply of oil so far it has caused jitters in the stock market and pushed up prices. The major petrol companies said they had no immediate plans to lift their prices in response but would watch to see how their competitors reacted.

However, with the margin on a litre of petrol around only 3p, industry figures said it was only a matter of time before the companies were forced to protect their profits.

Nick Vandervell, communications director for the UK Petrol Industry Association, said: 'It doesn't take long before a high oil price digs a very deep hole in the retailers' profits. Once the pressure starts to build they can't hold out for very long.'

There are also fears that a planned 2p rise in fuel duty this September could trigger a new wave of protests, putting further upward pressure on petrol prices.

Holloway said: 'Unless the Government reverses its tax position, there is no way of halting the rise in fuel prices this year.

'Fuel protesters would be much less likely to take action if the Chancellor was to reconsider his 1 September fuel duty rise.'

The gunman who led the attack in Saudi Arabia was wounded and taken prisoner on Sunday. He was high on their wanted list and a veteran of Osama bin Laden's training camps in Afghanistan, the Saudi government claims.

Michael Hamilton, a 62-year-old from Sussex, was among the 22 foreign workers killed. His body was dragged through the streets.

A hunt is under way for three other gunmen involved in the attack. They escaped in mysterious circumstances with at least one survivor claiming security forces let them go. The victim's unconfirmed version of events includes claims the gunmen were set free in return for not blowing up the building with everyone in it.

The Saudi government believes that militants in the country are still being advised by Bin Laden.