Drivers are paying almost £19 more to fill a family diesel car since the US-Israel war with Iran began, as the conflict sent petrol and mortgage costs soaring before a tentative dip.
According to the RAC, petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel hit 191.54p on 15 April. The latest data shows petrol at just under 157p and diesel under 178p, with the RAC expecting further falls. But the damage to household budgets is already clear: it now costs £97.22 to fill a 55-litre diesel car – £18.91 more than on 28 February – and £85.74 for a petrol tank, up £12.68 since the conflict started.
“Petrol and mortgage costs surged in the UK since the Iran war began, with diesel filling up £18.91 more.”
Crude oil, a key ingredient in fuel, has seen volatile wholesale prices as the production and transportation of energy across the Middle East was disrupted. Because transporting oil is slow, price movements take about a fortnight to show at the pump. Fuel retailers have denied accusations of price gouging, and the regulator said there was no evidence of widespread profiteering.
The knock-on effect extends beyond the forecourt. Higher transport costs for supermarkets could feed into the price of food.
Mortgage holders have also felt the shock. Before the war, there were hopes of steady falls in interest rates. Instead, lenders raised rates rapidly as their own funding costs rose and expectations for the base rate shifted. The average two-year fixed rate jumped from 4.83% at the start of March to a peak of 5.90% on 12 April, before dropping to 5.61% as of mid-June, according to Moneyfacts. Five-year deals followed a similar pattern: from 4.95% to a peak of 5.78%, then down to 5.58%.
Despite the slight easing, many face significantly higher repayments than planned. The Bank of England said that over the next three years, average monthly payments for those moving to a new deal are expected to rise by approximately £80. About 53% of UK mortgage holders are expected to see their payments increase.