UK motorists are already seeing cheaper fuel prices after the US and Iran agreed to end their war, with further falls expected in the coming weeks, according to the BBC. Brent crude – the global benchmark – fell to around $76 a barrel on Thursday after the framework deal was signed, before rising to just under $80 on Friday. The conflict, which began on 28 February, had sent oil prices soaring as it disrupted production and transportation across the Middle East, with Brent peaking above $120 a barrel.
Wholesale Oil Prices and Pump Costs
Crude oil is a key ingredient in petrol and diesel, meaning higher wholesale costs directly affect pump prices. Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre, the BBC reported. Before the conflict, Brent was about $70 a barrel; the war drove it above $120. The recent deal has reversed much of that surge, with Brent falling to around $76 before a slight recovery.
UK Petrol and Diesel Price Movements
According to the RAC, the price of petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel's highest price during the conflict was 191.54p a litre on 15 April. Since 28 May, the price of petrol has come down by 4.8p to 154.7p a litre, with diesel reducing by 10.3p to 174.3p a litre.
| Fuel Type | Pre-Conflict (28 Feb) | War Peak | Current (date of report) | Change from Peak |
|---|---|---|---|---|
| Petrol | ~142p (estimated) | 159.53p (28 May) | 154.7p | -4.8p |
| Diesel | ~172p (estimated) | 191.54p (15 Apr) | 174.3p | -10.3p |
The RAC says it now costs £85.05 to fill up a 55-litre family car with petrol – £12 more than on 28 February – and £95.86 for a tank of diesel – £17.56 more than at the start of the conflict. Despite the war, prices remained below the summer 2022 peaks after Russia's invasion of Ukraine, when petrol reached 191.5p and diesel 199p.
"Even more positively, the rate of reduction ought to accelerate as the price of a barrel of oil has been under $80 for the last two days – something we haven't seen since the start of March," said Simon Williams, head of policy at the RAC. He added that petrol could fall below 150p a litre over the next week, and diesel is likely to fall to under 170p.
Supply Disruption and the Strait of Hormuz
The Middle East conflict had a major impact on oil prices because it effectively closed the Strait of Hormuz – one of the world's key water transport routes for oil, liquid natural gas, and other essential commodities. The BBC reported that about 20% of the world's oil passes through this chokepoint, limiting global supplies during the conflict.
Outlook and Key Data
Luke Bosdet, head of policy at the AA, said the group had been surprised at the speed that prices had fallen and put it down to the government's Fuel Finder scheme, which lets drivers compare fuel costs across petrol stations. He added that despite the falls, road fuel is "still very expensive" compared with pre-pandemic levels when petrol was about 120p. On 20 May, Prime Minister Sir Keir Starmer said a planned 5p increase in fuel duty due in September would be postponed until 31 December because of the conflict. Because transporting oil is a slow process, price movements in wholesale markets take about a fortnight to show at the pump, meaning further falls are likely in the coming days if Brent crude remains under $80.
