Drivers filling up a 55-litre family car with diesel are now paying £97.22 – £18.91 more than before the conflict began on 28 February. The US-Israel war with Iran has disrupted oil production and transport across the Middle East, making wholesale crude prices volatile. That volatility has taken about a fortnight to reach forecourts. According to the RAC, petrol hit a war peak of 159.53p a litre on 28 May, while diesel peaked at 191.54p on 15 April. Since then, prices have dipped: petrol now just under 157p, diesel under 178p, with the RAC expecting further falls. However, a tank of petrol still costs £85.74 – £12.68 more than at the start of the conflict.
Higher petrol prices push up transport costs for supermarkets, which can feed through to food prices. Fuel retailers have denied price gouging, and the regulator has said there is no evidence of widespread profiteering.
“Diesel tank costs £18.91 more since the Iran war began, while two-year mortgage rates peaked at 5.90%.”
The war has also rattled mortgage markets. Lenders raised rates quickly on expectations that the base rate would not fall as previously thought. 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 easing to 5.61% by mid-June, according to Moneyfacts. Five-year deals followed a similar pattern: from 4.95% to 5.78% and then 5.58%. Many homeowners now face higher repayments. The Bank of England estimates that over the next three years, average monthly payments for those moving onto a new deal will rise by about £80. About 53% of UK mortgage holders are expected to see their payments increase.
For drivers and homeowners alike, the ripple effects of the conflict continue to squeeze household budgets – and with the Strait of Hormuz still disrupted, any relief may take time.