UK motorists could soon see cheaper fuel after the US and Iran reached a framework agreement to end their war, sending oil prices tumbling. The RAC said the deal to open the Strait of Hormuz should quickly bring prices down at the pumps.
When the conflict began on 28 February, fuel costs jumped as the war significantly disrupted energy production and transportation across the Middle East. The price of Brent crude, the global benchmark, soared from about $70 a barrel before the war to a peak above $120. Petrol reached a conflict high of 159.53p a litre on 28 May, while diesel hit 191.54p a litre on 15 April.
“US-Iran deal sends oil prices down, RAC predicts petrol could fall to 148p a litre within weeks”
In recent weeks prices have fallen. The news of the framework deal pushed oil down to around $83 a barrel. In the last week, petrol has come down nearly 2p to 156.37p a litre, and diesel has reduced by 3p to 177.89p a litre. The RAC said it now costs £97.22 to fill a 55-litre family car with diesel – £18.91 more than on 28 February – and £85.74 for a tank of petrol, £12.68 more than at the start of the conflict.
Simon Williams, RAC head of policy, said: “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. If oil now begins to consistently trade around $85… we should see the price of petrol reduce to 148p a litre from its current average of 156p in the next couple of weeks. Diesel, which currently costs an average of 177p, ought to fall to under 160p.”
Despite the conflict, petrol and diesel prices have remained below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol hit 191.5p a litre and diesel 199p.
Because transporting oil is a slow process, price movements in wholesale markets take about a fortnight to show at the pump. Fuel retailers have denied accusations of price gouging during the conflict; 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 lets drivers compare fuel costs across the UK.
The conflict has split the Republican Party and left Americans facing higher prices with no clear sense of victory, according to the Financial Times. The deal leaves President Trump fighting a war at home.