Motorists across the UK could soon be paying significantly less at the pumps after the United States and Iran reached a framework agreement to end their war, sending oil prices sliding. The price of Brent crude – the global benchmark – fell to around $83 a barrel following news of the deal, a sharp drop from its conflict peak of above $120.
The war, which began on 28 February, triggered a surge in fuel costs as it disrupted the production and transportation of energy across the Middle East. Petrol hit an Iran-war peak of 159.53p a litre on 28 May, while diesel reached its highest point of 191.54p a litre on 15 April. But in the last week alone, the price of petrol has fallen nearly 2p to 156.37p, and diesel has dropped by 3p to 177.89p.
“UK drivers could see petrol fall to 148p a litre after the US and Iran reached a deal to end their war.”
The RAC said the deal should drive prices down further. “The oil price has already dropped as a result of the US Iran deal to open the Strait of Hormuz which is good news for drivers as this should quickly bring prices down at the pumps,” said Simon Williams, the motoring group’s head of policy. He predicted that if oil trades consistently around $85 a barrel, petrol could reduce to 148p a litre from its current average of 156p “in the next couple of weeks”, and diesel would fall to under 160p from its current 177p.
Despite the conflict, fuel prices remain below the record levels seen in the summer of 2022 following Russia’s invasion of Ukraine, when petrol hit 191.5p a litre and diesel reached 199p. The RAC noted that filling a 55-litre family car with diesel now costs £97.22 – £18.91 more than on 28 February – while a tank of petrol costs £85.74, £12.68 more than before the war.
Crude oil is a key ingredient in petrol and diesel, meaning higher wholesale prices directly affect pump costs. Analysts say every $10 increase in the oil price pushes up petrol by about 7p a litre. Because transporting oil is a slow process, movements in wholesale markets take roughly a fortnight to show at the forecourt. Fuel retailers have denied accusations of price gouging during the conflict, and the official markets regulator said it had “not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis”. A government scheme called Fuel Finder now allows drivers to compare the cost of petrol and diesel at stations across the UK.