Soaring petrol prices could reach £2 a litre if the situation in Libya and other oil-producing nations in the region worsens, the Overseas Development Minister has warned.
Alan Duncan fears the record $147-a-barrel price reached for oil in 2008 will be smashed unless calm returns to the Middle East and North Africa in the coming months.
The minister, a former oil trader, said that $200 a barrel is quite possible, and if oil-producing nations are hit by co-ordinated terrorist action on top of the revolutionary unrest, the price could reach $250 a barrel, which would see the advent of the £2 litre.
He said in a newspaper interview: "I've been saying in government for two months that if this does go wrong, £1.30 at the pump could look like a luxury. $200 is on the cards.
"It could be very serious. If crude oil doubles, you're going to have a serious spike [in prices]. Try living without it for a week."
His comments came as the Government tried to sidestep some of the heavy criticism it has been facing for doing little to alleviate the problems caused by rises in petrol prices to businesses and to individuals, especially those in rural areas without easy access to public transport.
In an effort to ease some of the pressure, the Government confirms that island and remote communities are to be granted a 5p reduction in fuel duty. A planned rise in fuel duty is widely expected to be scrapped in the forthcoming Budget.
The suggestion that oil prices could reach $200 a barrel prompted renewed warnings that it could lead to a double-dip recession because of the increased pressure on household income.
A survey by Theos, a think tank, suggested that fuel price rises combined with cuts in public services are the issues most likely to bring widespread protests in Britain.