If you’ve filled up your car in the last few weeks, you’ve probably noticed the shock at the pump. Petrol and diesel prices across the UK have climbed sharply, putting further pressure on household budgets and increasing costs for businesses that rely on transport.
So, what’s causing the rise, and what needs to happen before prices fall again?
The main reason is that the cost of crude oil has risen significantly on global markets. Oil is traded internationally, meaning events thousands of miles away can have a direct impact on prices at UK forecourts.
The biggest driver of recent increases has been ongoing conflict and instability in the Middle East, particularly around Iran and the Strait of Hormuz, one of the world’s most important energy shipping routes. Around a fifth of global oil supplies pass through this area, so any threat to shipping quickly pushes oil prices higher.
As oil traders become concerned about future supply disruptions, the price of Brent crude, the benchmark used for much of the world’s oil pricing, rises. In recent weeks, Brent crude has moved above $100 per barrel, significantly higher than earlier in the year.
Crude oil is the raw material used to make petrol and diesel. When the wholesale price of oil rises:
However, pump prices don’t change overnight. There is usually a delay of several days or weeks as higher wholesale costs work their way through the supply chain.
Diesel prices have risen even faster than petrol prices.
This is partly because diesel is essential for haulage companies, delivery fleets, agriculture, construction and public transport. Demand remains high, while global refining capacity for diesel remains under pressure. Some analysts have also highlighted concerns about diesel supply availability heading into winter.
As a result, diesel prices in the UK have recently reached record highs, exceeding previous peaks seen during the energy crisis following Russia’s invasion of Ukraine in 2022.
The oil price is not the only factor.
Fuel prices are also influenced by:
Unfortunately, fuel prices are unlikely to fall significantly until oil markets calm down.
Several things would help:
Any agreement that reduces tensions and allows oil to move freely through major shipping routes would ease concerns about supply shortages. This would likely put downward pressure on oil prices.
Industry experts say that a sustained fall in oil prices is needed, not just a short-term drop lasting a few days. Cheaper crude oil over several weeks would eventually feed through to lower wholesale and retail fuel prices.
An increase in global production or refining capacity would help balance supply and demand, particularly for diesel.
The Government could choose to reduce fuel duty or maintain existing duty freezes to help offset some of the pressure on motorists. However, any such decisions would depend on future fiscal policy and Budget announcements.
The recent rise in petrol and diesel prices is largely the result of global events rather than anything happening at local fuel stations. Higher oil prices, geopolitical tensions, supply concerns and currency movements have all combined to push costs higher.
While drivers will understandably be hoping for relief soon, the reality is that prices are unlikely to fall substantially until global oil markets become more stable and wholesale costs ease for a sustained period.
For now, the best advice is to shop around, as fuel prices can still vary significantly between forecourts, often by more than 10p per litre.
The simple truth is this: when oil prices rise, fuel prices follow. When oil prices fall and stay lower for long enough, motorists will finally begin to see that reflected at the pumps
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If you’ve filled up your car in the last few weeks, you’ve probably noticed the shock at the pump. Petrol and diesel prices across the UK have climbed sharply, putting further pressure on household budgets and increasing costs for businesses that rely on transport.
So, what’s causing the rise, and what needs to happen before prices fall again?
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