UK motorists experienced the fastest monthly fall in diesel prices since 2000 in June, with the cost plunging by 17p a litre, according to the RAC. The dramatic drop comes as hopes of lasting peace in the Middle East grow, following months of volatility driven by the US-Israel war with Iran.
When the conflict began on 28 February, fuel prices surged as it severely disrupted the production and transportation of energy across the region. Brent crude, the global benchmark, jumped from about $70 a barrel before the war to a peak of above $120. That pushed the average price of petrol to an Iran war high of 159.53p a litre on 28 May, while diesel hit its highest average of 191.54p a litre on 15 April.
“Diesel prices fell 17p a litre in June, the fastest monthly drop since 2000, as Iran war fears eased.”
But since the US and Iran agreed to a framework deal to end the fighting in June, prices have nosedived. Brent crude has fallen back to around $72 a barrel. Over the course of June, the RAC said the average price of diesel sank from 183.75p a litre to 167.14p a litre, while petrol dropped from 159.37p to 151.40p.
The AA said it expects pump prices to fall further, adding that “the timing is perfect for the start of the summer holidays”. However, the RAC cautioned that prices are “still some way off” where they were before the Iran war, when average petrol was 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.”
Because transporting oil is a slow process, price movements in wholesale markets take about a fortnight to show at the pump. Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre.
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 hit 191.5p a litre and diesel 199p. Fuel retailers have denied accusations of price gouging during the conflict, and 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 fuel costs across UK petrol stations.