UK Fuel Prices Climb Again as Middle East Conflict Resurges

UK petrol prices have climbed to their highest level since mid-June, according to data from motoring organisation RAC, as renewed tensions in the Middle East conflict continue to hit drivers' wallets.

The cost of fuel typically mirrors the wholesale price of oil, and both have been on an upward trajectory for weeks following the collapse of peace talks aimed at ending the conflict.

How the Conflict Drives Oil Prices

Crude oil serves as a fundamental component in both petrol and diesel, meaning that when wholesale costs rise, filling up a vehicle becomes noticeably more expensive. Analysts estimate that every $10 (£7.53) increase in the oil price translates to roughly a 7p per litre rise at the pump.

Since the conflict erupted on 28 February, the price of Brent crude — the global benchmark for wholesale oil — has experienced significant volatility. Prior to the fighting, Brent sat at approximately $70 a barrel. The conflict drove it to a peak exceeding $120, before it dropped back to around the $70 mark in early July following the signing of a framework deal between the US and Iran. However, prices have since climbed back above $100 a barrel as tensions have resurfaced.

Simon Williams, head of policy at the RAC, warned: "Unless the hostilities end soon, it's hard not to see the price of petrol reaching a new Iran war high."

What's Happening at UK Pumps

According to RAC figures, the average price of petrol hit a conflict-era peak of 159.53p a litre on 28 May, while diesel reached its highest average of 191.54p a litre on 15 April. By early July, following the framework agreement, prices had dropped — petrol fell to 150.59p per litre and diesel to 164.52p per litre.

Since those lows, however, both have been climbing again. The latest RAC data shows petrol now costing 156.19p a litre, with diesel at 173.15p a litre.

Despite the recent increases, current prices remain below the record levels seen in the summer of 2022 following Russia's invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p a litre.

Because transporting oil is a slow process, changes in wholesale market prices typically take about a fortnight to be reflected at petrol stations.

Why the Strait of Hormuz Matters

The Middle East conflict sent global oil prices soaring largely because it effectively closed the Strait of Hormuz, one of the world's most critical water transport routes for oil, liquefied natural gas, and other essential commodities. The strait normally handles approximately 20% of the world's oil and liquefied natural gas.

Although a deal was struck between the US and Iran, experts caution that a return to normal shipping levels through the Strait of Hormuz will take time, and the economic fallout from the war could persist for months.

UK Oil Supply and Government Response

The UK depends heavily on oil and gas imports, with the majority sourced from the US and Norway. The price the UK pays is determined by the global oil market. While some domestic oil comes from the North Sea, most of that is exported for refining elsewhere.

Fuel retailers have faced accusations of price gouging during the conflict, but they have denied such claims. The official markets regulator stated it had "not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis."

A government initiative called FuelFinder allows drivers to compare fuel prices across UK petrol stations. Luke Bosdet, head of policy at the AA, said the organisation had been surprised by how quickly prices fell and attributed this to the scheme.

On 20 May, then Prime Minister Sir Keir Starmer announced that a planned 5p increase in fuel duty, originally scheduled for September, would be postponed until 31 December due to the conflict.

As tensions in the Middle East show little sign of abating, UK drivers may continue to feel the pinch at the pump. Have you noticed rising fuel costs in your area? Share this article with friends and family who might be affected, and join the conversation about what comes next for fuel prices.

Source: BBC Business