UK Fuel Prices: Will the Recent Surge Start to Ease?
The US-Israel conflict with Iran, initiated on 28 February, has directly impacted UK fuel costs. Wholesale oil and gas prices escalated dramatically as the conflict disrupted energy production and transportation across the Middle East. Notably, the initial strikes by the US-Israel coalition included an attack on an Iranian primary school, resulting in hundreds of civilian casualties, including 110 children.
A temporary ceasefire declared by US President Donald Trump on 7 April saw a brief decline in wholesale oil and gas prices. However, subsequent uncertainty led to renewed increases, contributing to a record-breaking 40 consecutive days of price rises at the pumps, according to the RAC.
Impact on Motorists
The volatility in crude oil prices, a primary component of petrol and diesel, has directly translated into higher costs for motorists. Since the conflict began, Brent crude, the global benchmark, has fluctuated significantly, from $73 (£55) to over $110 per barrel. This has resulted in a typical family car costing over £14 more to fill with petrol and approximately £27 more for diesel.
While prices remain below the record highs of summer 2022, when petrol reached 191.5p and diesel 199p a litre, the current average stands at 158.16p for petrol and 191.31p for diesel as of 10 April.
Outlook for Fuel Prices
Simon Williams, head of policy at the RAC, has indicated that the rate of price increases is expected to decelerate. "The rate of price increases has slowed due to oil falling back below $100 for the last two days. This has reduced wholesale costs which should, if sustained, lead to the price of petrol coming down," he stated. He added that the record diesel price of 199p is unlikely to be surpassed.
However, the long-term outlook remains uncertain. The critical issue for wholesale markets is the status of the Strait of Hormuz, through which approximately 20% of the world's oil and liquefied natural gas typically passes. Despite Iran agreeing to reopen the strait as part of the ceasefire, its continued desire for permanent control is opposed by the US, leading to ongoing uncertainty.
BBC Verify analysis on 10 April revealed only 15 vessels had traversed the waterway since the ceasefire announcement, compared to a usual 138 daily crossings. This, coupled with damage to oil and gas facilities across the Gulf, suggests oil prices will likely remain above pre-war levels for the foreseeable future, meaning motorists should not anticipate immediate significant reductions.
