Motorists across the UK are already seeing cheaper fuel prices after the US and Iran struck an agreement to end their war, with further falls expected in the coming weeks. When the conflict began on 28 February, fuel costs jumped as the war significantly disrupted the production and transportation of energy across the Middle East. But in recent weeks they have dropped, and the framework deal has sent them to their lowest point since the first days of the war in early March.
Motoring group the AA has said it expects pump prices to fall further and “the timing is perfect for the start of the summer holidays”. Meanwhile, rival group the RAC has said price reductions “should be faster and greater, particularly for diesel”.
“UK petrol prices drop to lowest since early March after US-Iran ceasefire, with further falls expected.”
Crude oil is a key ingredient in petrol and diesel, which means higher wholesale costs make filling up a car more expensive. Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre. Before the conflict, Brent crude was about $70 a barrel, but the conflict saw it peak at above $120. The price has slipped in recent weeks and after the framework deal was signed it fell to around $76 a barrel. It has continued to drop and at one point fell below $72.48 (£55) a barrel, the price it was the day before the US and Israel launched attacks on Iran on 28 February.
According to the RAC, the price of petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel’s highest price during the conflict was 191.54p a litre on 15 April. Since 28 May, petrol has come down. The RAC said on Friday, 26 June the average price of petrol had fallen 2p in a week to 151.98p and diesel by 4p to 168.64p. It now costs £83.59 to fill up a 55-litre family car with petrol and £92.75 for diesel, though this is still £10.50 and £14.40 respectively more than at the end of February before the conflict began.
Simon Williams, head of policy at the RAC, said: “Fuel prices are falling steadily in reaction to the drop in the price of oil and wholesale petrol and diesel costs which is good news for drivers who’ve had a torrid time at the pumps this year. But our analysis of wholesale data shows the reduction should be faster and greater, particularly for diesel. Drivers really ought to see average prices of below 150p for unleaded and below 160p for diesel in the next week or so.”
Despite the conflict, petrol and diesel prices remained below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p.