UK motorists have been handed the fastest monthly fall in diesel prices since 2000, with the cost plunging by 17p a litre in June, according to the motoring group RAC. The dramatic drop follows a framework deal between the US and Iran to end a war that began on 28 February, when fuel prices surged after the conflict severely disrupted energy production and transportation across the Middle East.
Since the deal was agreed in June, prices have nosedived. The AA said it expects pump prices to fall further, adding that “the timing is perfect for the start of the summer holidays”. But the RAC warned prices are “still some way off” where they were before the Iran war.
“Diesel prices fell 17p a litre in June, the fastest monthly drop since 2000, after the US-Iran peace deal.”
Crude oil is a key ingredient in petrol and diesel, meaning higher wholesale costs make filling up more expensive. Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre. Before the conflict, Brent crude – the global benchmark – was about $70 a barrel; it peaked at above $120 during the war. Since the framework deal was signed, the price has dropped back to around $72 a barrel.
According to the RAC, the average price of petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel’s highest average price during the conflict was 191.54p a litre on 15 April. Since then, prices have tumbled. Over the month of June, the RAC said the average price of diesel sank from 183.75p a litre to 167.14p a litre; petrol dropped from 159.37p a litre to 151.40p a litre. However, that is still much higher than before the conflict began, when average petrol prices were 132p a litre and diesel 142p a litre.
Simon Williams, the RAC’s head of policy, said: “As things stand, petrol should dip under 150p soon and diesel ought to get to below 160p, but we would need the price of oil to fall further to see a return to the pre-conflict prices.”
Despite the conflict, petrol and diesel prices remain below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p. Because transporting oil is a slow process, price movements in the wholesale markets take about a fortnight to show at the pump.
Fuel retailers have denied accusations of price gouging during the conflict. The official markets regulator said it had “not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis”. A government scheme called Fuel Finder lets drivers compare the cost of fuel offered by petrol stations across the UK.
The AA’s head of policy, Luke Bosdet, said the group had been surprised at the speed of the fall, as the cost of oil tumbled on hopes of lasting peace in the Middle East.