UK Petrol and Diesel Prices Soar, Threatening Further Increases as Strait of Hormuz Closure Persists
Since the commencement of the US-Israel war with Iran on 28 February, UK motorists have endured a substantial surge in fuel costs. Production and transportation of energy across the Middle East have been severely curtailed by missile strikes and drone attacks, directly impacting global oil markets.
Wholesale Costs Drive Pump Prices Upward
The price of Brent crude oil, the international benchmark, has demonstrated extreme volatility since the conflict began, escalating from USD#73 to a peak of USD#126 per barrel. Analysts estimate that every USD#10 increase in oil prices translates to approximately 7p per litre at the pump. This has seen the cost of filling a typical family car with petrol rise by around GBP#14, while diesel increased by GBP#27.
Average petrol prices reached 158.3p a litre and diesel hit 191.5p a litre. Although prices briefly eased from 16 April after 46 consecutive days of increases, petrol has begun to climb again, with diesel expected to follow suit if the critical situation in the Strait of Hormuz continues. On 5 May, petrol stood at 157.2p a litre and diesel at 188.3p.
Simon Williams, head of policy at the motoring group RAC, described the outlook as "ominous," noting that wholesale petrol and diesel prices surged by approximately 5p a litre last week, reaching their highest point since the war's inception. He stated that sustained elevated oil and wholesale fuel prices would render future forecourt price rises "all but inevitable."
Strait of Hormuz Closure and Global Energy Supply
The Strait of Hormuz, through which typically 20% of the world's oil and liquefied natural gas passes, has been effectively closed since the war began. Reports indicate only a minimal number of ships have transited the strait since a temporary ceasefire was announced, a drastic reduction from the normal average of 138 daily crossings. While oil prices initially fell after the ceasefire, they have since risen sharply due to the strait's continued closure.
US President Donald Trump's announcement of a US military operation, "Project Freedom," to guide cargo ships through the strait has been met with Iran's assertion that passage requires its authorisation, perpetuating uncertainty and keeping oil prices above pre-war levels. Furthermore, widespread damage to oil and gas facilities across the Gulf, including the UAE's Fujairah oil industry zone, has severely disrupted refining capacity.
UK Vulnerability and Household Impact
The UK, heavily dependent on oil and gas imports primarily from the US and Norway, is directly exposed to these global price fluctuations. While the UK holds more than the required 90 days' worth of net oil imports as an International Energy Agency (IEA) member, the closure of the Strait of Hormuz has prompted warnings of potential fuel shortages in Europe within weeks, as cautioned by the head of oil giant Shell. The IEA has also indicated that Europe may have "maybe six weeks of jet fuel left."
For millions of UK households, domestic gas and electricity bills are shielded from immediate wholesale cost impacts by the current price cap, which will remain until the end of June. However, future price cap adjustments in July could see bills rise if the conflict persists. Households reliant on heating oil, particularly in Northern Ireland and rural areas, are already experiencing increased costs, leading to a government support package of GBP#53m.
