Filling up a family car now costs £85.74 for a tank of petrol – £12.68 more than before the conflict began. Diesel drivers face an even steeper hike: £97.22 for a 55-litre tank, £18.91 more than on 28 February, according to the RAC.
The price at the pump has jumped since the US-Israel war with Iran started, then dipped from its peak. Petrol hit 159.53p a litre on 28 May, diesel 191.54p on 15 April. Latest data shows petrol just under 157p, diesel just under 178p. The RAC expects further falls.
“Petrol and mortgage costs have soared since the Iran war began, with a typical family car costing £12.68 more to fill.”
Crude oil – a key ingredient in fuel – has become volatile as production and transportation across the Middle East were disrupted. Transporting oil is slow, so wholesale price movements take about a fortnight to show at the pump. Fuel retailers deny price gouging, and the regulator says there is no evidence of widespread profiteering.
Higher petrol costs ripple through the economy: if supermarket transport costs rise, that can be reflected in the price of food.
Before the war, interest rates on new fixed mortgages were expected to fall steadily. Instead, lenders raised rates quickly because their own funding costs rose and the base rate was not expected to fall as fast. The average two-year fixed rate jumped from 4.83% at the start of March to a peak of 5.90% on 12 April, then dropped to 5.61% as of mid-June, according to Moneyfacts. Five-year deals rose from 4.95% to a peak of 5.78%, then dipped to 5.58%.
Many face higher repayments. The Bank of England says over the next three years, average monthly payments for those moving onto a new deal are expected to rise by about £80 – though there could be considerable variation. About 53% of UK mortgage holders are expected to see their payments rise.
Hopes of a lasting deal to end the war have risen, but the political situation can change quickly – and so can the effect on personal budgets. Even if the Strait of Hormuz reopened, it would take time for oil and economic activity to flow freely again.