What’s Happening to UK Petrol and Diesel Prices?
Drivers across the UK have been paying more for petrol and diesel since the conflict between the US, Israel, and Iran began on 28 February. The war has caused major problems for oil production and transport in the Middle East, leading to higher fuel prices around the world.
The RAC motoring group has warned that prices at petrol stations could continue to rise if the conflict is not resolved soon.
Why Are Fuel Prices Rising?
Petrol and diesel are made from crude oil. When the global price of oil increases, fuel prices at petrol stations usually go up as well.
Experts say that every $10 increase in the price of a barrel of oil adds about 7p per litre to petrol and diesel prices.
Since the war started, the price of Brent crude oil, which is the global benchmark, has changed dramatically. At one point, it rose from $73 to $126 per barrel. This was the highest level since Russia invaded Ukraine in 2022.
Because of this increase, filling up a normal family car with petrol became around £14 more expensive. Diesel drivers were hit even harder, with a full tank costing about £27 more.
Current Petrol and Diesel Prices in the UK
On 19 May, petrol prices in the UK reached 158.5p per litre, the highest level since the conflict began. Diesel prices climbed to 185.9p per litre.
Prices had briefly fallen after peaking in mid-April, but they soon started rising again.
The RAC believes unleaded petrol could soon reach 160p per litre unless oil prices drop significantly and stay lower for a long period. Diesel prices may rise more slowly, but drivers are still expected to pay more.
Even though prices are high, they are still below the record levels seen in summer 2022 after the Russia-Ukraine war began. At that time, petrol reached 191.5p per litre, while diesel almost hit 199p.
Why Fuel Prices Take Time to Change
Oil moves slowly through the global supply chain. It takes time for crude oil to be shipped, refined, and delivered to petrol stations. Because of this, changes in wholesale oil prices usually take around two weeks to appear at the pump.
Some people accused fuel retailers of unfairly increasing prices during the conflict. However, the UK’s markets regulator investigated and found that profit margins stayed mostly unchanged between February and March.
To help drivers compare prices, the government offers a scheme called Fuel Finder. It allows motorists to check fuel prices at petrol stations across the UK.
Government Support for Drivers
On 20 May, Prime Minister Keir Starmer announced that a planned 5p increase in fuel duty, which was due in September, would now be delayed until 31 December because of the conflict.
The 5p fuel duty cut was first introduced in 2022 and has been extended several times since then.
The government also announced more support measures:
- Fuel duty on red diesel, used by farmers and rail freight companies, will be reduced by more than one-third from 15 June until the end of the year.
- Haulage companies will receive a 12-month break from HGV vehicle excise duty.
These measures are designed to reduce pressure on businesses and consumers facing rising transport costs.
The Importance of the Strait of Hormuz
One of the biggest concerns for global oil markets is the Strait of Hormuz. This narrow waterway is extremely important because around 20% of the world’s oil and liquefied natural gas normally passes through it.
Since the war began, the strait has been effectively closed, creating major supply problems.
A ceasefire between the US, Israel, and Iran started on 8 April and has mostly held. However, long-term peace talks have not been successful, especially regarding control of the Strait of Hormuz.
Oil prices dropped briefly after the ceasefire announcement, but they later rose again as efforts to reopen the strait failed.
At the same time, oil and gas facilities across the Gulf region have been damaged, reducing refining capacity and creating further shortages.
Investment bank JPMorgan Chase believes oil prices could stay above $100 per barrel for the rest of the year, even if restrictions in the strait are removed.
Where Does the UK Get Its Oil and Gas?
The UK depends heavily on imported oil and gas. Most supplies come from the United States and Norway.
Although the UK still produces some oil from the North Sea, much of it is exported to other countries for refining.
Because oil is traded globally, the UK must pay international market prices, even for some of its own production.
Could the UK Face Fuel Shortages?
On 16 April, Chancellor Rachel Reeves said the UK was not facing an immediate shortage of petrol, diesel, or jet fuel.
According to the Department for Energy Security and Net Zero, oil provides about 35% of the UK’s total energy supply.
The UK is also a member of the International Energy Agency (IEA), which requires countries to hold emergency oil reserves equal to 90 days of imports. The UK currently holds more than this minimum amount.
The IEA has suggested several ways to reduce fuel use during the crisis, including:
- Encouraging employees to work from home
- Promoting car sharing
- Reducing unnecessary travel
Impact on Flights and Airlines
The war has also affected airlines. European jet fuel prices more than doubled after the conflict started and are still around 50% higher than before.
The IEA warned that Europe may only have about six weeks of jet fuel supplies left.
As fuel costs rise, airlines around the world, including in the UK, have cancelled flights and increased ticket prices.
In response, the UK government introduced new measures:
- On 2 May, airlines facing fuel shortages during summer were allowed to cancel flights in advance without losing valuable airport slots.
- On 20 May, the government eased some sanctions on Russian oil refined into diesel and jet fuel in other countries. Some transport restrictions on Russian liquefied natural gas (LNG) were also relaxed.
These steps aim to reduce pressure on the aviation industry and keep flights operating.
Will Energy Bills Increase?
In the short term, most UK households are protected from sudden rises in gas and electricity prices because of the energy price cap.
Energy bills actually fell slightly in April, and prices will remain fixed until the end of June.
However, experts expect bills to rise again in July when the next price cap begins.
Analysts at Cornwall Insight predict the annual energy bill for a typical household could rise by £209, increasing from £1,641 to £1,850 per year. This would represent a 13% increase.
The UK energy regulator Ofgem is expected to confirm the new price cap on 27 May.
People with fixed energy contracts will not see immediate increases during their contract period. However, some suppliers have already removed cheaper fixed-rate deals from the market because of uncertainty.
Heating Oil and Government Support
Many households in Northern Ireland and rural areas use heating oil instead of gas. Heating oil prices react more directly to changes in global oil markets.
As oil prices have risen, these households are facing higher costs when refilling their tanks.
To help affected families, the government announced a £53 million support package.
Conclusion
The conflict in the Middle East has created serious pressure on global energy markets. Higher oil prices, damaged energy infrastructure, and problems in the Strait of Hormuz have all pushed up the cost of petrol, diesel, flights, and household energy.
While the UK government has introduced support measures to reduce the impact, experts believe prices could remain high for the rest of the year unless there is a long-term resolution to the conflict.
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