UK Motorists Anticipate Cheaper Petrol as US-Iran Deal Reopens Strait of Hormuz
UK motorists could see a reduction in fuel costs following the US-Iran framework deal, which has prompted a drop in global oil prices. The conflict, which began on 28 February, significantly disrupted energy production and transportation in the Middle East, leading to an initial surge in fuel expenses.
The RAC noted that crude oil prices have already decreased on news of the agreement, indicating that this should "quickly bring prices down at the pumps." Crude oil is a primary component of petrol and diesel, meaning wholesale price fluctuations directly affect what drivers pay. Analysts estimate that every $10 increase in oil prices pushes pump prices up by approximately 7p per litre.
The price of Brent crude, the international benchmark for wholesale oil, experienced significant volatility since the conflict started. Initially around $70 a barrel, it peaked above $120. Following the framework deal, prices have receded to approximately $83 a barrel.
Petrol prices reached a peak of 159.53p a litre on 28 May during the conflict, while diesel hit 191.54p a litre on 15 April. In the past week, petrol has dropped nearly 2p to 156.37p a litre, with diesel falling 3p to 177.89p a litre. The RAC calculates that filling a 55-litre family car with diesel now costs £97.22, £18.91 more than on 28 February, and £85.74 for petrol, £12.68 more.
Simon Williams, RAC head of policy, stated, "If oil now begins to consistently trade around $85... we should see the price of petrol reduce to 148p a litre from its current average of 156p in the next couple of weeks." He added that diesel, currently averaging 177p, "ought to fall to under 160p."
The Middle East conflict caused global oil prices to surge by effectively closing the Strait of Hormuz, a vital route for about 20% of the world's oil and liquefied natural gas. The UK, heavily reliant on oil and gas imports primarily from the US and Norway, is directly impacted by these global market dynamics. Price changes in wholesale markets typically take about two weeks to manifest at the pump.
