The signing of a peace deal between Iran and the US on 18 June brought an end to the war that had sent shockwaves through the global economy since February. The key Strait of Hormuz shipping corridor is set to reopen, but negotiations on the thorniest issues – including Iran's nuclear programme – have been deferred for 60 days, raising questions about how long the agreement will last.
At the petrol pumps, drivers have already seen prices drift lower in recent weeks on rising hopes for peace. But they remain far above pre-conflict levels. In the UK, petrol cost an average of 154.72p per litre as of Thursday, according to RAC Fuel Watch, while diesel stood at 174.30p. Nearly four months ago, before the war began, petrol was 132.05p a litre and diesel 141.6p. In the US, the average gasoline price has fallen from a peak above $4.50 last month to $3.97 per gallon – still well above the $2.98 before the conflict, while diesel has risen from $3.76 to $5.09.
“Iran-US peace deal signed 18 June, but nuclear talks deferred 60 days; UK fuel prices still far above pre-war levels.”
Simon Williams, head of policy at the RAC, said the recent fall in global oil and wholesale petrol prices “if sustained – will in time lead to much lower prices at the pumps”. But he warned: “The big question is how fast will this happen, and whether the fall in pump prices happens as swiftly as the rise drivers had to endure through March and April did.”
Gas prices, too, have eased but remain elevated. The benchmark UK gas price almost doubled at the start of the war, peaking at around 157p per therm on 19 March. Now it has fallen back to 98p per therm, still above the sub-80p level before hostilities began. The consultancy Cornwall Insight cautioned that it would be “overly optimistic” to assume prices will quickly return to pre-conflict levels.
One immediate hurdle for households is that the UK energy regulator Ofgem has already set its next price cap on energy bills for July, which cannot be changed. The average household bill is set to rise by 13% – or £221 a year – from next month, affecting 33 million households in England, Wales and Scotland. The Gulf supplies around half of Europe's jet fuel, so air fares remain under pressure. For now, the peace deal offers hope but the deferred nuclear talks leave a crucial question unanswered: will the relief at the pump come fast enough – or will the next crisis arrive before the last one has faded?