Oil and gas prices soar as market takes double-hit

Oil and gas prices have made hefty gains after the market took a double-whammy hit following a European gas hub explosion and the shut down of a major North Sea pipeline.

The energy sector is under pressure and consumer prices are heating up
The energy sector is under pressure and consumer prices are heating up

Brent crude surged more than 1.5% to $65.72 - hitting its highest level since the middle of 2015 - in response to the supply being turned off at the Forties pipeline.

Operator Ineos said the pipeline, which carries 40% of the North Sea oil and gas, could be offline for up to three weeks as they work to repair a crack.

The extra pressure on global supply comes as the markets continue to react to the Opec-led decision to extend production cuts at the beginning of the month.

Separately, UK natural gas prices experienced double-digit growth to reach 73.7p a therm on ICE Futures Europe following a blast at a natural gas plant in Austria.

One person has reportedly died and 18 people have been injured at the plant in Baumgarten an der March, east of Vienna, which transports a significant amount of European gas.

“Brent Crude oil hit its highest level since early June 2015 as the closure of Forties North Sea pipeline curbed supply,” said David Madden, analyst at CMC Markets.

“The energy market was already strong as Opec and Russia agreed to extend the co-ordinated production cut until the end of 2018, and now this move by Forties has added to the upward pressure.”

Crude oil surged by 7.6% between October and November, reaching its highest level since December 2016, according to the Office for National Statistics (ONS).

As a result, motorists faced higher prices at the pumps in November, with petrol up by 1.8p per litre month-on-month to 119.1p, while diesel rose by 2.3p a litre to 122.8p.