The average price of unleaded petrol increased to 158.52p per litre, marking the highest recorded cost since the commencement of the Iran war on 28 February. Data released by the RAC indicates that this current price surpasses the previous peak of 158.31p recorded on 15 April, which had subsequently declined by more than a penny before climbing again at the start of May. Fuel prices surged initially when the conflict disrupted energy production and transport networks across the Middle East due to missile strikes and drone attacks.
Wholesale Oil Costs And Market Forecasts
Wholesale energy market metrics show that Brent crude oil currently trades at approximately $111 per barrel, rising from its pre-conflict trading value of about $73 per barrel. This raw material inflation drove the average pump price of unleaded petrol up from 132.83p per litre at the start of the war. Concurrently, average diesel prices rose from 142.38p per litre to 185.92p per litre. The RAC projected that unleaded petrol prices will likely reach at least 160p per litre in the near term in the absence of a dramatic, sustained reduction in global oil prices.
Government Tax Policy And Duty Speculation
The price escalation coincides with reports that the Chancellor of the Exchequer may cancel scheduled plans to increase fuel duty by one penny this September. This proposed increase represented the initial phase of reversing the 5p fuel duty reduction established during the Ukraine war. Maintaining the current fuel duty rate at 52.95p per litre would provide financial relief to motorists facing higher refueling costs. The Treasury stated that it does not issue comments regarding speculation on tax policy.
Diesel Market Deviations And Retailer Margins
The near-term outlook for diesel divergence remains positive because wholesale acquisition costs declined significantly from their early April peak. Although retail diesel prices fell to their lowest level since the beginning of last month, RAC head of policy Simon Williams stated that pump prices should be lower given the reduced wholesale trends. The motoring organization requested that fuel retailers adjust forecourt pricing to reflect the lower costs experienced when purchasing new wholesale supplies.
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