UK Petrol and Diesel Prices Increase Since February US-Israel War Against Iran
UK motorists have experienced increased fuel costs following the commencement of the US-Israel war against Iran on 28 February. The conflict has severely disrupted energy production and transportation across the Middle East, with missile strikes and drone attacks at times halting operations entirely. The RAC motoring group has cautioned that pump prices are likely to continue their ascent if the conflict remains unresolved.
Crude oil, a fundamental component of petrol and diesel, sees its wholesale cost directly reflected in prices at the pump. Industry analysts estimate that every $10 increase in the oil price translates to an approximate 7p per litre rise in pump prices. Since the war began, the price of a barrel of Brent crude, the international benchmark, has demonstrated extreme volatility, peaking at $126 a barrel from an initial $73.
Petrol prices reached 158.5p a litre on 19 May, marking the highest point since the conflict’s inception, while diesel stood at 185.9p a litre. The RAC anticipates unleaded petrol could reach at least 160p a litre in the coming weeks. However, current prices remain below the summer 2022 peaks of 191.5p for petrol and 199p for diesel, observed after Russia's full-scale invasion of Ukraine.
A critical factor influencing global oil markets is the status of the Strait of Hormuz, through which approximately 20% of the world's oil and liquefied natural gas normally transits. The strait has been largely closed since the war began. Despite a ceasefire between the US/Israel and Iran initiated on 8 April, efforts to secure a durable peace agreement and reopen the strait have failed, contributing to renewed sharp rises in oil prices after an initial post-ceasefire dip. Furthermore, damage to oil and gas facilities across the Gulf has significantly impaired refining capacity.
JP Morgan projects global oil prices will likely remain above $100 for the remainder of the year, even if current restrictions on the strait are eased. The UK, heavily reliant on oil and gas imports primarily from the US and Norway, is directly exposed to these global price fluctuations. While Chancellor Rachel Reeves stated in April that the UK does not face an immediate shortage of fuels, the International Air Transport Association (IATA) has warned of inevitable higher air ticket prices in Europe due to elevated jet fuel costs, and domestic energy bills could rise after the current price cap expires in June.
