UK petrol prices have risen to their highest level since the beginning of the Iran war as the conflict continues to hit drivers’ finances. The average cost of petrol has reached more than 163p per litre, according to motoring group the RAC, which warned prices could climb higher yet. The price of fuel tends to track the wholesale price of oil, which surged when the Iran conflict began on 28 February. The fighting has severely disrupted oil supplies across the Middle East.
Prices then nosedived when US and Iran agreed to a framework deal to end the conflict in June, but they have risen again since the collapse of peace talks. Crude oil is a key ingredient in petrol and diesel, which means that higher wholesale costs make filling up a car more expensive. The price of petrol and diesel is also heavily influenced by demand and refining capacity. Analysts say every $10 (£7.44) per barrel increase in the oil price pushes up pump prices by roughly 7p a litre.
Since the war began, the price of a barrel of Brent crude – the global benchmark for wholesale oil prices – has been very volatile. Generally speaking, news of further conflict drives the price up while hopes of an end to the war pushes the price down. Before the conflict, Brent was about $70 a barrel, but the fighting saw it peak at above $120. In early July, after the framework deal was signed, prices fell back to near the $70 a barrel mark.
When the peace talks collapsed, the price climbed back up again to above $100 a barrel, but are now around $94. While petrol has hit its highest price since the Iran war began, according to the RAC, diesel remains below the peak of 191.54p a litre it reached on 15 April. In early July, the RAC said the average price of petrol sank to a low of 150.59p per litre and 164.52p per litre for diesel. Since then the prices have risen, with petrol now at 163.6p a litre while diesel costs 184.99p a litre.
RAC’s head of policy Simon Williams said that, with oil prices remaining elevated, drivers will “almost certainly start paying noticeably more at the pumps in the coming weeks”. Despite the conflict, petrol and diesel prices remain below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p. Because transporting oil is a slow process, price movements in the wholesale markets take about a fortnight to show at the pump. Fuel retailers have denied accusations of price gouging during the conflict.
The official markets regulator said it had “not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis”. A government scheme called Fuel Finder, external lets drivers compare the cost of fuel offered by petrol stations across the UK. Luke Bosdet, the head of policy at the AA, said the group had been surprised at the speed that prices had fallen and put it down to the scheme. In May, the then Prime Minister Sir Keir Starmer said a planned 5p increase in fuel duty due in September would be postponed until the end of December because of the conflict.
No evidence of widespread fuel price-gouging, watchdog says Drivers can compare fuel prices at different petrol stations – how does it work? The Middle East conflict sent global oil prices soaring as it effectively closed the Strait of Hormuz — one of the world’s key water transport routes for oil, liquid natural gas and other essential commodities — limiting global supplies. About 20% of the world’s oil and liquefied natural gas normally passes through the waterway. Even if a deal is agreed to reopen the strait, experts warn it will take time before normal levels of shipping through the Strait of Hormuz resume, and the impact of the war will continue to affect the global economy for potentially months to come.
Why and how is US blockading Iranian ports in Strait of Hormuz? Oil price predicted to remain above $100 for rest of year The UK is heavily reliant on oil and gas imports, with the majority coming from the US and Norway. The price of oil on the global market determines how much the UK pays for it. Although the UK does get some oil from the North Sea, most of that is exported for refining elsewhere.
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