Petrol and diesel prices are at the highest point since July 2015, with predictions of a continual increase.
Petrol and diesel prices rose by around 3p a litre in December taking them to their highest average prices, according to the RAC.
RAC Fuel Watch data for the last month of 2016* shows unleaded hit 117.23p a litre on 29 December and diesel 119.63p having been 114.24p and 116.56p a litre at the beginning of the month.
The rise has been contributed to the oil production cuts announced by the OPEC at the end of November.
The price of oil is more than double what it was in January 2016 when a low of $26 a barrel was recorded.
RAC fuel spokesman Simon Williams said: “The rising oil price is bad news for motorists as it caused a nasty jump in pump prices in the most expensive month of the year.
“While forecourt prices rose by 3p a litre in December as the RAC predicted, they didn’t rocket as others had forecast. The big question now is how much further are they likely to go up, particularly in the long January wait to the next payday.
“So far the price rises we’ve seen are purely down to the announcement at the end of November that OPEC and non-OPEC countries would be cutting oil production this month. Everything now depends on the strength of the deal and each country sticking to the agreed production levels. Russia will be of particular interest as it is currently producing at near record levels.
“We are optimistic that prices will not increase by another 3p a litre in January based on what’s going on with oil and wholesale fuel now, but if in the months ahead the barrel price was to get nearer to $60 and the pound was to weaken further then that would be the worst possible combination for motorists.
“Our current forecast for the next two weeks is for petrol to be around the 118p mark and for diesel to go up to around 121p a litre. We should also say that we need the pound not to lose any more value against the dollar as fuel, like oil, is traded in dollars.”
* The core data for the December 2016 RAC Fuel Watch report is based on an analysis of Experian Catalist average prices from 4 to 29 December 2016